In his first "Executive Decision" segment of Mad Money Tuesday evening, Jim Cramer spoke with Sumit Singh, CEO of pet supply retailer Chewy (CHWY) which just posted a strong quarter that included 45% sales growth.
Singh said the mission at Chewy is still the same, to the surprise and delight of their customers. He said the pandemic has only taken what was already a strong secular trend and accelerated it by several quarters.
When asked about their growth, Singh said that they don't expect their value proposition to change once vaccines are readily available. He said Chewy operates in a very large market and their number of customers with new pets is up 40% for the year.
The company is now expanding into healthcare services to help make veterinary care more accessible and affordable for the nearly one-third of pet owners who don't see their vet regularly.
We reviewed the charts of CHWY on December 4 ahead of earnings and wrote that, "The charts of CHWY suggest that further gains to the $110 area possible. Risk to $60 on existing longs and new longs."
Let's check out the charts and indicators again.
In this updated daily bar chart of CHWY, below, we can see that prices have climbed to new highs. Prices and the indicators are in a bullish alignment - rising prices, positively sloped moving averages, rising On-Balance-Volume (OBV) line and a bullish Moving Average Convergence Divergence (MACD) oscillator.
In this weekly bar chart of CHWY, below, we can see a positive picture. Prices are in an uptrend and above the rising 40-week moving average line.
The weekly OBV line is bullish with a new high for the move up and so is the MACD oscillator. No warning flags here.
In this updated daily Point and Figure chart of CHWY, below, we used a percentage scaling instead of a traditional even dollar scaling. Here we can see that prices made a new high for the move up. A price target of only $86 is projected when last week the traditional scaling gave us a $110 price target. Interesting how targets can change when you manipulate the data.
Bottom line strategy: Continue to hold new and existing CHWY longs. Raise stop protection to $69 and look to take some profits at the new and lower price target of $86.