James Star, a director at Chewy (CHWY), recently bought 15,353 shares. The buy increased his stake by 3 percent, and came to a total cost just under $300,992.
This is the first insider buy at the company since last June, when Star made two large buys totaling nearly $10 million. Otherwise, company insiders have been regular sellers of shares over the past year, including the CFO and CEO.
Overall, Chewy insiders own 1.9 percent of shares.
The online pet store’s shares have dropped over 50 percent in the past year. The company has struggled with profitability, even with revenues inching up 8 percent.
Shares trade at about 70 times forward earnings, so without significant earnings growth, shares may have limited upside from here.
Action to take: Chewy shares have been in an uptrend for the past few weeks, and may continue higher in the short-term.
Shares could likely see low-double-digit returns from here. If the company can improve its earnings, the uptrend may continue from there.
For traders, the current uptrend plays well to a call option trade. The April 2024 $25 calls, last going for $1.85, could see mid-to-high double-digit returns depending on how quickly shares rally in the coming weeks.
Traders may want to take quick profits should the current uptrend in shares start to stall out.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.