A Once-in-a-decade Opportunity: 3 Of The Best Stocks To B…

1. Chewy: 58% below 52-week high

Leading e-commerce pet goods juggernaut Chewy (CHWY +2.88%) has had a tumultuous run as a publicly traded company since its 2019 debut. Currently, its stock is 14% below its initial public offering (IPO) price and 58% below its 52-week high, which might prompt investors to think Chewy’s a busted business.

But that notion couldn’t be further from the truth. Over the last seven years, Chewy’s sales have nearly quadrupled. It has reached profitability (alongside strong free-cash-flow generation) and expanded into numerous, higher-margin pet categories.

Most importantly for investors, the core of Chewy’s operations — its Autoship offering (repeat, scheduled purchases of necessary items pet food) — remains robust, accounting for 84% of the company’s sales. The steady, predictable nature of Autoship’s sales provides Chewy with ample cash flows to explore new areas such as private-label goods, Chewy Vet Clinics (CVCs), advertising, health and wellness, and even an expansion into Canada.

Chewy Stock Quote

NYSE: CHWY

Chewy

Today’s Change

(2.88%) $0.54

Current Price

$19.31

Key Data Points

Market Cap

$7.9B

Day’s Range

$18.23 – $19.41

52wk Range

$18.22 – $43.84

Volume

403.5K

Avg Vol

8.8M

Gross Margin

28.87%

I believe Chewy is poised to begin reaping the rewards of its investments in high-margin areas, particularly through its CVCs. ing the company’s acquisition of fellow vet clinic Modern Animal, Chewy expects to have roughly 60 CVCs open in 2026. These CVCs are important to the Chewy investment thesis because 40% of their new customers weren’t previously in the Chewy ecosystem. Furthermore, these new customers spend roughly $900 in their first year with Chewy — well above the company’s average of $600 for its current customer base.

Trading near an all-time low price-to-sales ratio of 0.6 and with an adjusted forward price-to-earnings ratio of 12.5, Chewy with its rising margins and high single-digit sales growth looks deeply undervalued.

2. Sprouts Farmers Market: 50% below 52-week high

Health food-focused grocer Sprouts Farmers Market (SFM 2.03%) has also seen its price roughed up lately, dropping 50% below its 52-week high. However, this decline probably had more to do with its valuation getting stretched too far than anything going wrong with the actual business.

Despite the challenging consumer environment and Sprouts’ slight premium pricing for its differentiated groceries, sales rose 4% in its latest quarter, while same-store sales (SSS) only dipped 2%. While no SSS decline is great, I don’t think it is outrageous considering the circumstances, and Sprouts’ deeply discounted valuation at just 15.6 times forward earnings more than accounts for these challenges.

Sprouts Farmers Market Stock Quote

NASDAQ: SFM

Sprouts Farmers Market

Today’s Change

(-2.03%) $-1.79

Current Price

$86.33

Key Data Points

Market Cap

$8.1B

Day’s Range

$85.67 – $88.90

52wk Range

$64.75 – $173.96

Volume

1.3M

Avg Vol

2.2M

Gross Margin

36.98%

Sprouts shifted to a smaller store format in the early 2020s and has become a true growth story ever since thanks to its rising margins and improved new-store economics. Sprouts plans to continue growing its store count by more than 10% annually as it expands beyond its current 483 stores in 25 states. Over the long term, management hopes to triple its store count — and I don’t believe that is unrealistic as consumers continue to shift toward healthier eating options, especially among soaring GLP-1 use.

If Sprouts can deliver anywhere near that level of store-count expansion — while launching a new loyalty program and growing its private-label offerings — the company could be a top-tier growth stock at today’s valuation.

3. Tractor Supply Company: 51% below 52-week high

Much Sprouts Farmers Market, leading rural lifestyle retailer Tractor Supply Company (TSCO 0.13%) has seen its sales growth slow to 4%, and its stock has been absolutely pummeled as a result. Down 51% from its 52-week high — and trading at a mere 15 times earnings — Tractor Supply is being treated as though it is going out of business rather than the niche-leading behemoth that it is.

TSCO PE Ratio data by YCharts.

The company has 2,435 stores. Management’s long-term goal of 3,200 doesn’t offer a massive growth opportunity Sprouts, but Tractor Supply should benefit from the ongoing shift toward rural migration in the U.S. Furthermore, the company’s Neighbor’s Club rewards program is home to over 38 million members, which account for roughly 80% of Tractor Supply’s sales, highlighting how entrenched members are into their ecosystem.

Additionally, since Tractor Supply’s operations are rural focused, it generates the bulk of its sales from consumable, usable, and edible products, such as livestock feed, pet food, and essential farm supplies. These repeat purchases make the company’s Neighbor’s Club a no-brainer in most cases.

Tractor Supply Stock Quote

NASDAQ: TSCO

Tractor Supply

Today’s Change

(-0.13%) $-0.04

Current Price

$31.22

Key Data Points

Market Cap

$16B

Day’s Range

$30.92 – $31.44

52wk Range

$28.36 – $63.99

Volume

554.5K

Avg Vol

10.6M

Gross Margin

33.23%

Dividend Yield

3.01%

Best yet for prospective Tractor Supply investors, the company’s 3.1% dividend yield is at its highest-ever level, and the dividend has been raised for 16 straight years. Despite this, the dividend uses only 46% of Tractor Supply’s net income, so it is still incredibly well funded. Thanks to Tractor Supply’s growing dividend, its massive loyal member base, its once-in-a-decade low valuation, and rural migration trends in the U.S., the company makes for an excellent steady-Eddie dividend growth stock to buy and hold for a decade.