Chewy: Your Pet Investment Portfolio Unlikely To Find Better Play (NYSE:CHWY)

The primary focus of this article is the coming stock prices of Chewy, Inc. (NYSE:CHWY).

Investing Thesis

Think back to the changes your grandparents lived through from their childhood: Atomic power, radio displaced by television, computers, discovery of DNA biology, evolution of the internet, wireless telephones, . . .

Technological progress hasn’t slowed down, instead it appears to be increasing and we are chasing to keep current. As investors our progress is even more dependent on anticipating coming technology and human behavior evolution, in the midst of increasingly complex surroundings.

The forecasters who can help us are the pros who everyday “fry the fish” we want to “eat” in our investment portfolios. They have to deal with the huge and irregular anticipation appetites of “institutions” with multi-billion-$ portfolios demanding transactions to adjust for their today’s anticipation of technology. Expectations likely to soon appear to we ten-or 100-share investors maintaining the continual open-interest demands seen in exchange bid and offer quotes.

Those pros employ the well-educated and continuously-informed anticipating researchers and information-gatherers active world-wide on a 24x7x365 basis needed to do the firm’s essential market-making-transaction jobs.

But they don’t want us in front of them in the buying and selling appetite-lines they intend to profit from by their disruptions. It’s what pays their rents and retirements and those of their employed supporters. So, efficient market transactions have to be quick and clean.

What makes them that way are stock-price-change “insurance” speculators willing to hedge-protect the Market-Makers during the temporary risks that must be taken in the brief disruption periods. The costs of that protection reveal the coming-price expectations of that community, on both sides of each trade.

For those derived price forecasts we keep score on how the active markets subsequently reward or punish the expectations of prior experiences. That is this article’s job of presenting alternative investing choices for a not-certain near future of the next 3-5 months.

Description of the Primary Investment Candidate

“Chewy, Inc., together with its subsidiaries, engages in the pure play e-commerce business in the United States. The company provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its www.chewy.com retail Website, as well as its mobile applications. It offers approximately 100,000 products from 3,000 partner brands. The company was founded in 2010 and is headquartered in Dania Beach, Florida.”

Source: Yahoo Finance

Present Reward & Risk Prospects of Alternative Investments

Figure 1

(Used with permission.)

Expected rewards for these securities are the greatest gains from current closing market price seen worth protecting short positions. Their measure is on the horizontal green scale.

The risk dimension is of actual price drawdowns at their most extreme point while being held in previous pursuit of upside rewards similar to the ones currently being seen. They are measured on the red vertical scale.

Both scales are of percent change from zero to 25%. Any stock or exchange-traded fund (“ETF”) whose present risk exposure exceeds its reward prospect will be above the dotted diagonal line. Capital-gain attractive to-buy issues are in the directions down and to the right.

Our principal interest is in CHWY at location [3], midway between [8] and [1]. A “market index” norm of reward~risk tradeoffs is offered by SPY at [8]. The most appealing (to own) by this Figure 1 view is CVNA at location [2] but further examination will show why this may not be so.

Comparing features of Alternative Investment Stocks

The Figure 1 map provides a good visual comparison of the two most important aspects of every equity investment in the short term. There are other aspects of comparison which this map sometimes does not communicate well, particularly when general market perspectives like those of SPY are involved. Where questions of “how likely’ are present other comparative tables, like Figure 2, may be useful..

Yellow highlighting of the table’s cells emphasize factors important to securities valuations and the security CHWY, most promising of near capital gain as ranked in column [R]. Pink cell fills indicate inadequate proportions of essential performance competitive requirements, as in [H], [L-N] and [T].

Figure 2

(Used with permission.)

The price ranges implied by the day’s transactions activity are in columns [B] and [C], typically surrounding the day’s closing price [D]. They produce a measure of risk and reward we label the Range Index [G], the percentage of the B to C forecast range which lays between D and C.

Today’s Gs are used for each stock’s past 5-years of daily forecast history [M] to count and average prior [L] experiences. Fewer than 20 of Gs or a shorter than 3 year history of Ms are regarded as statistically inadequate.

[H] tells what percentage of the L positions were completed profitably, either at range-top prices or by market close above day after forecast close price entry costs. The Net realization of all Ls is shown in [ I ].

[ I ] fractions get weighted by H and 100-H in [O,P, & Q] appropriately conditioned by [J] to provide investment ranking [R] in CAGR units of basis points per day.

The pink cell highlighting provides fatal investment evaluation conditions for several candidates including the market-index ETF (SPY). Additional market perspective is provided by the 3,300+ securities for which price range forecasts are available. They currently suggest that while market recovery is under way, it is still far from generally attractive.

On the other hand, R column scores for CHWY and the top 20 forecast population support the primary candidate’s competitive capability.

Recent Trends of Price Range Forecasts for CHWY

Figure 3

(used with permission)

This IS NOT a typical “technical analysis chart” of simple historical (only) observations. Instead it pictures the daily updated Market-Maker price range forecasts implied by live real-capital commitments in real time. Its communicative value is present here by visual comparisons at each forecast date of the proportions of upside and downside vertical line price change expectations by the market-making community, as influenced by the actions of an interested and involved big-$ institutional investing community.

Those forecasts are typically resolved in time horizons of less than a half year, and often in two months or shorter. This one states that of the 45 prior forecasts like today’s, all (out of nearly 800) were completed in 20 market-days (4 weeks) profitably at average +18% profits, a CAGR rate of 700+%. No promises, just fun with history, and an awareness of the present need for Active Investment frequent need for re-evaluation of opportunities.

Conclusion

Comparison of the performances of near-term Market-Maker forecasts for Chewy, Inc. with similar forecasts of other technologically-active securities pursued by investor referencing, it seems clear that this stock can be an attractive investment choice for investors pursuing near-term capital gain strategies.