Chewy Inc. (CHWY) has rallied +102% since it was first spotlighted on The Call @ Hedgeye on May 29, 2024—making it one of the top-performing retail names discussed on the show over the past year.
Hedgeye Retail Sector Head Brian McGough’s team recently elevated CHWY to the top of their Long Bias list:
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“This is one that we want more exposure to right now—and we’re doing the work to see if it should be a Best Idea.” |
Let’s break down the setup that sparked the move—and why the Retail team still sees upside across TREND and TAIL durations.
FUNDAMENTALS: A Defensive Growth Story With Real Momentum
Chewy is no longer just a pandemic-era trade — it’s evolving into a durable, category-leading platform in pet care and e-commerce.
70%+ of sales are consumables, giving CHWY a staples-like, defensive profile—meaning it's more resilient during economic downturns, much like traditional consumer staples.
Customer metrics are inflecting: active users are growing again, spend per customer is rising, and 80% of customers are now on AutoShip—Chewy’s recurring delivery program that boosts retention and predictability.
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“Chewy offers a defendable moat,” the team writes, “CHWY is creating a trust-based flywheel that would be tough for Amazon to replicate.” |
Add in a $100M buyback alongside a major shareholder's $1B secondary offering (where existing shares are sold to new investors), and it’s clear: Chewy’s management is playing offense while tightening float—a reduced float can increase share price volatility to the upside as demand meets a smaller supply of tradable shares.
QUANTITATIVE SIGNAL: Trend Confirmed, Volatility Managed
Hedgeye CEO Keith McCullough’s Risk Range™ Signals identified CHWY’s upside breakout early—driven by his proprietary algorithm that analyzes price, volume, and volatility trends.
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Since that initial long call, CHWY has surged +102%, reinforcing both the strength of the signal and the underlying investment case.
MACRO BACKDROP: Quad 2 Boosts Beta
Chewy’s move aligns with Hedgeye Macro’s regime shift from Quad 4 to Quad 2—a macroeconomic setup where growth and inflation are both accelerating. In this environment, high-beta stocks (those more sensitive to market moves) tend to outperform.
Unlike many retail stocks exposed to tariffs, rate shocks, or bloated inventories, CHWY benefits from consumer inelasticity (people spend on pets regardless of price) and minimal trade exposure. Its staples-like profile combined with long-term growth potential make it a standout in today’s macro environment.
BOTTOM LINE: It’s Not Just About the Stock—It’s About the Process
CHWY’s move is notable. But what matters more is how the call was made—a combination of Keith’s signal, macro regime alignment, and analyst insight that creates a repeatable edge.
Want to catch setups like this before they take off?
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