Keith Gill, aka Roaring Kitty, has a brand new favourite inventory.The person behind the GameStop meme inventory phenomenon filed a disclosure with the Securities and Alternate Fee (SEC) on July 1 displaying that on June 24, he took a 6.6% stake in Chewy (NYSE: CHWY). As of the shut of buying and selling on July 3, that stake was value about $217 million. That is an enormous wager for Gill.The mix of Gill’s bullishness and his social media following has made the inventory extraordinarily risky. Shares surged greater when Gill posted an image of a cartoon canine on X in late June, they usually moved once more following the SEC disclosure. However Chewy inventory has already given again most all of the features it made since Gill made his large buy, after which some. That provides those that is likely to be all in favour of following him into the inventory a chance to get in at an analogous value.Ought to retail buyers severely take into account taking a cue from this YOLO wager by the meme inventory king?Picture supply: Getty Photographs.The main on-line retailer for all kitties (and different pets)Chewy is the most important on-line retailer of pet merchandise. Pets are widespread in U.S. households, and the quantity folks spend on them is rising quickly. The American Pet Merchandise Affiliation forecasts that People will spend over $150 billion on their pets this 12 months, up from $90 billion in 2018.That places Chewy in a positive place. In on-line retail, dimension issues. It makes fulfilling and transport orders extra environment friendly, thus lowering one among e-commerce’s greatest bills. Chewy makes use of that benefit in two methods. First, it is capable of supply aggressive pricing on pet provides and over-the-counter medicines because of its working effectivity. Second, it is leveraging its present buyer base to increase into new verticals.Particularly, Chewy has expanded its efforts in promoting and healthcare. Veterinary care and prescribed drugs account for greater than 25% of that $150 billion in pet trade spending. That is an enormous marketplace for Chewy to take a slice out of.Chewy Well being is simply getting began. The corporate opened 4 vet care clinics this 12 months and plans to speak in confidence to 4 extra by 12 months’s finish. The next combine shift to healthcare merchandise amongst its on-line gross sales led to sturdy gross margin growth within the first quarter.Likewise, sturdy advert gross sales boosted income and gross margin. The corporate expects its promoting revenues will develop to grow to be 1% to three% of its whole prime line. Whereas that sounds small, promoting gross sales can have an enormous influence on the underside line since advertisements command excessive working margins.A loyal core buyer baseWhile the variety of energetic Chewy clients has declined for the reason that top of the pandemic, it has a rising core buyer base.Story continuesCustomers who use its recurring autoship characteristic accounted for 77.6% of gross sales within the first quarter. That was the very best proportion the corporate had ever recorded.Autoship is a win-win for Chewy and its clients. Clients get small reductions on objects they buy on an everyday cadence akin to treats or medication. Chewy features extra predictability about its clients’ orders, can bundle extra objects collectively to scale back transport prices, and experiences greater buyer retention.The corporate is working to extend buyer loyalty with a brand new paid membership program, Chewy Plus, that gives limitless free transport, rewards, and unique perks. This system is presently within the testing part.Each autoship, its new membership program, and its rising healthcare enterprise (with bodily areas) may be nice methods to foster buyer loyalty, they usually can all work in live performance.Is Chewy inventory a roaring purchase?At their current costs, Chewy shares appear like good worth.The corporate’s enterprise worth is about about 20 occasions its ahead EBITDA estimates. And it ought to expertise sturdy bottom-line progress as income climbs greater and margins increase because of its promoting and healthcare efforts. Analysts presently anticipate its earnings per share (EPS) will develop 178% this 12 months and 68% subsequent 12 months.EPS progress was additional supported by the $500 million share repurchase program administration introduced along with its first-quarter earnings report. It executed that share repurchase in a single fell swoop final month, shopping for 17.55 million shares at a value of $28.49 apiece from a single entity. It nonetheless has over $500 million left in money on its stability sheet, primarily based on its first-quarter report, and it generates constructive free money circulation each quarter.Whereas a stock-buyback deal at that value does not look that spectacular when shares commerce for round $25 at present, it does counsel that administration felt it was a good value for the shares. And administration has higher data than any outsider concerning the future funds of the corporate.With sturdy progress forward of it, Chewy is an organization value proudly owning. Traders simply should be conscious that Gill’s involvement with the inventory might create a variety of volatility within the share value.Don’t miss this second probability at a probably profitable opportunityEver really feel such as you missed the boat in shopping for probably the most profitable shares? Then you definately’ll need to hear this.On uncommon events, our professional crew of analysts points a “Double Down” inventory suggestion for firms that they assume are about to pop. When you’re nervous you’ve already missed your probability to take a position, now could be one of the best time to purchase earlier than it’s too late. And the numbers communicate for themselves:Amazon: for those who invested $1,000 after we doubled down in 2010, you’d have $22,254!*Apple: for those who invested $1,000 after we doubled down in 2008, you’d have $41,863!*Netflix: for those who invested $1,000 after we doubled down in 2004, you’d have $368,072!*Proper now, we’re issuing “Double Down” alerts for 3 unbelievable firms, and there is probably not one other probability like this anytime quickly.See 3 “Double Down” shares »*Inventory Advisor returns as of July 2, 2024Adam Levy has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Chewy. The Motley Idiot has a disclosure coverage.Roaring Kitty Owns $217 Million of Chewy Inventory. Ought to You Get In Now? was initially revealed by The Motley Idiot