Growth stocks can present excellent opportunities for building a portfolio over a long investment horizon. But after more than three years in which the stock market rose, driven primarily by growth stocks, many top companies appear overvalued. While investors in growth stocks are typically less concerned about price than growth potential, valuation still matters.
But for those willing to dig deeper into individual companies, there are still plenty of great growth stocks trading at fair or even better valuations. One stock, in particular, seems like an obvious opportunity, and you can buy shares for less than $50 right now. Here’s why investors should take a closer look Tough (NYSE: CHWY).
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If you have a pet, you probably know Chewy. It is the leading e-commerce provider of pet supplies. What makes Chewy such an attractive business is the loyalty of its customers.
Has a net sales retention rate of over 100%. That means every customer you sign up in one year ends up spending more the next year and even more the year after that. The company’s oldest cohorts, who started buying from Chewy in the early 2010s, now spend more than $1,000 a year at the pet supplies retailer.
That growth is supported by its Autoship program, which accounted for 84% of its sales in the third quarter of 2025. With such a large percentage of sales coming from the recurring shipping program, Chewy is able to predict sales, manage inventory, and reduce shipping costs, resulting in higher operating margins over time. It produced an adjusted EBITDA margin of 5.4% over the past 12 months, and management is targeting a 10% margin over the long term.
Chewy’s recent push into healthcare, insurance, and pet advertising should support margin expansion. All three fit well with their core retail operations, with the opportunity to ship prescription medications along with toys and treats each month, generating higher margin sales without a significant increase in operating expenses for the retail business. The integration should further strengthen customer loyalty, improving their net revenue retention rates.
Chewy continues to attract new customers while increasing spending by its older customers on its growing portfolio of services, supported by its online retail operations. That should produce solid high-single-digit revenue growth. But with continued improvements in your operating margin, your profits will grow much faster. Analysts expect 23% growth in earnings per share this year.