2 Great Growth Stocks To Buy On The Dip Heading Into June

Chewy’s 2020 revenue surged 47% to $7.15 billion to beat FY19’s 37% sales expansion. The company also reported its first quarterly profit in Q4, crushing our bottom-line estimates. Overall, the digital pet store giant added 5.7 million net active customers last year, up 43% to close the year with 19.2 million.

Zacks estimates call for its 2021 sales to jump 25% or $1.8 billion higher to reach roughly $9 billion, with FY22 projected to see it add another $1.7 billion, or 20% stronger revenue. Meanwhile, its adjusted earnings are expected to skyrocket 122% to $0.20 a share this year and soar another 150% in FY22. Chewy is set to release its Q1 results Thursday, June 10.

The nearby chart showcases CHWY’s improved earnings outlook that helps it land a Zacks Rank #2 (Buy), next to its “A” grade for Growth. Furthermore, CHWY’s autoship business that allows people to have dog food and anything else delivered automatically at predetermined intervals accounts for roughly 70% of its total revenue. This creates consistent revenue streams among loyal pet owners.

Chewy was another big winner in 2020 and it’s still up 85% in the past year. But the stock has tumbled since mid-February (when growth stocks started to get crushed), with it down over 35% from its records at $74 a share. Like PINS, the stock has popped recently after it went into oversold RSI territory.

CHWY also trades at 3.2X forward sales, which marks a 15% discount to its year-long median. Some investors might want to wait for more signs of a comeback before considering Chewy, but longer-term investors don’t need to worry as much about trying to time the stock.

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