Buy This Best-in-Class Company at This Level…
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This week, War Room members have taken several big wins, and the week isn’t over yet…
The big winners were Biogen (Nasdaq: BIIB) and Campbell Soup Company (NYSE: CPB), both of which racked up triple-digit gains!
But there were other gains too. One of them is particularly interesting. Yesterday, members closed out our put sell trade on Chewy (NYSE: CHWY) for more than 24% in just a few days! When War Room members sell puts, they are essentially betting that shares will not go down to a particular level by expiration.
In the case of Chewy, the bet was that this $80 stock would not fall to $45 by expiration in January. While January is a long way away, members were able to lock in gains in a matter of days using my proprietary put selling formula.
But there is more to Chewy…
I think the company is an interesting play here but even more interesting at lower levels. So I’ll continue recommending selling puts on Chewy as long as the market is giving us the opportunity.
Chewy is the up-and-coming online platform for all things pet-related. And pets are a fast-growing industry in the U.S. and around the world.
From a fundamental perspective, Chewy checks all the boxes… It has growing sales and a great price-to-sales ratio, and it’s profitable and solid from a debt-to-equity perspective as well.
The company is also cheap enough at a market cap of around $32 billion for a company like Amazon to buy it without losing a step.
Amazon does not like competition, and I think it is a potential acquirer of Chewy in the future. While Amazon also sells pet products, it doesn’t have Chewy’s great reputation for customer service and competitive pricing. Chewy focuses on customer service, and it’s not unusual for the company to send out condolences when it notices that a customer is ordering or canceling based on the passing of a pet.
Here’s one example of how a couple reacted to Chewy’s refunding of their purchase and sending of flowers after the death of their pet:
Your team has either got it in their bloodline to be exceptionally kind and understanding, their leadership has done exceptionally well in guiding them or a combo of both. My wife has been taking their loss especially hard, and when we received the flowers, we decided it was enough for us both to decide to stop shopping around and give Chewy all our future business.
It’s this type of loyalty that can’t be bought. But it’s also the type of customer loyalty that makes Chewy the best-in-class company in the pet sector.
Action Plan: I am keeping an eye on Chewy, and when the time is ripe – on a pullback, for example – I will be recommending War Room members jump into the play with both feet. You’re going to want to be there when I do. Because I believe that if members buy Chewy at the right price, the profits could be huge!