Logistics Challenges Overlook Long-Term Potential In this Strong Trend Stock

While most companies have beaten earnings expectations so far this year, a murky outlook or a warning about the costs of inflation have often prevented shares of a company from moving higher.

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  • One company just made such a warning. Despite some shortages in key areas, however, it’s shown a strong 32 percent revenue growth, and came out with strong guidance. Yet shares sold off anyway.

    That company is Chewy (CHWY). Shares peaked in mid-February and are down nearly one-third since then, despite some strong earnings numbers. But shares have started to rise in recent sessions, and may shake off this earnings season slump to continue trending higher.

    While still not profitable, the online retailer of pet supplies has more cash than debt, and is at the forefront of the powerful trends of shipping everything direct as well as increased per capita spending on pets.

    Action to take: Shares look attractive here, as a return to their old high near $120 is about a 50 percent gain from the current price near $80. And with an uptrend in place the past few trading sessions, a call option like the October $85s, going for about $7.65 looks like it could deliver mid-to-high double-digit gains in the coming weeks. Traders should look for the uptrend to start faltering out to take profits on the trade.

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    Disclosure: The author of this article has no position in the stock mentioned here, but may make a trade this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.