This Undervalued Stock is Down By 64.77%, Should You Jump In
13th February 2024: Markets are going on a positive note in 2024, with an S&P500 up by more than 5%. This is a good time to jump in on undervalued stock as the trend continues.
Saqib Iqbal, a financial analyst at Trading.Biz, found a stock that has been beaten significantly in the past year (down by 64.77%) has more than 46% upside.
Chewy (NYSE: CHWY) is one to look for, as the company is undervalued by 15%.
The downtrend in price is a good sign, considering the company’s fundamentals.
Strong fundamentals, a recent launch in Canada, and plans for Chewy Vet Care clinic signify potential for long-term growth.
The company he is referring to is Chewy (NYSE: CHWY). It is one of the largest E-commerce pet stores and offers everything a pet needs, from food to toys.
He says, “I have been looking into NYSE: CHWY for the past year, and the company has surprisingly performed well during these harsh economic conditions. What I am looking at is the overall growth of the pet industry, and its Autoship service fits perfectly with the growth. Autoship service automatically reorders and ships items, accounting for 76.4% of overall net revenues.
Net sales per active client have risen by double digits in recent quarters.”
In the previous quarter, the company reported a net income of $6 million and expects an increase in sales by 10% compared to last year.
The company recently launched its operations in Canada and announced the opening of Chewy Vet Care, a veterinary clinic.
But the stock has been in the doldrums for the past year. NYSE: CHWY has been down by 64.77% since 2023. The key driver of the downfall was a decline in net margin from 0.5% to 0.1%, which resulted in a 105.67% loss in Chewy’s (NYSE: CHWY) market value.
In addition, the insider transactions have been worrying. Sumit Singh, the CEO, sold $3.5 million in shares on February 2. At the same time, interim CFO Stacy Bowman sold $19,800 shares, while CTO Satish Mehta sold $717,000.
But Saqib thinks it’s a short-term downtrend and presents a good buying opportunity, and the stock is undervalued by 15%.
NYSE: CHWY Stock Analysis
The stock is down by 26% since the start of 2024, and that’s why Saqib thinks it is trading at a bargain. The next resistance for NYSE: CHWY is 20.71. If the stock crosses this level, it can go towards 25.24, an increase of 46%.
It should be remembered that CHWY dropped from the high of 52.88 on February 3, 2023. If the stock manages to retain this level, it would increase by almost 204%.