Best Stock to Buy Right Now: Chewy vs. Freshpet

Core Viewpoint - The pet industry is experiencing significant growth, with Chewy and Freshpet being two companies that have capitalized on this trend. Freshpet is considered the better buy due to its stronger growth rate compared to Chewy [1][12]. Group 1: Business Models - Chewy is a leading e-commerce company in the pet industry, known for its autoship program and a wide range of products, totaling about 115,000 stock-keeping units (SKUs) from 3,500 brands [3][4]. - Freshpet specializes in fresh, refrigerated pet food, with its products available in over 26,000 stores, focusing on premium quality to meet consumer demand [5][6]. - Both companies have established competitive advantages, with Chewy dominating e-commerce and Freshpet leading in fresh pet food [7]. Group 2: Financial Performance - Chewy reported a revenue growth of only 2.6% in the second quarter, reaching $2.86 billion, indicating a slowdown in growth compared to previous periods [8][9]. - In contrast, Freshpet achieved a remarkable 26% revenue growth to $253.4 million, marking its 25th consecutive quarter of at least 25% growth, alongside significant margin expansion [10]. Group 3: Valuation - Chewy has a price-to-earnings (P/E) ratio of 28, influenced by substantial stock-based compensation, while Freshpet's P/E ratio is significantly higher at 170 due to its growth track record [11]. - Neither company pays a dividend, which is a consideration for investors [11]. Group 4: Investment Recommendation - Freshpet is viewed as the better investment option due to its robust growth and effective scaling with new manufacturing capabilities, while Chewy is facing challenges in finding new growth avenues [12][13].