The major theme for 2020 was the coronavirus pandemic and the resulting stay-at-home orders by local governments to help slow the spread. Although those orders have been moderated, brick-and-mortar businesses are still facing constraints and some are suffering from decreasing sales. That is adding fuel to the already existing trend of sales shifting from in-person to online. The stock I recommend for 2021 is in the right place at the right time to seize on the opportunity.
Thankfully, several effective vaccines have been developed against the coronavirus. Still, it may take up to two years before there is a complete return to normalcy. That should give this e-commerce company time to acquire even more customers. Without further ado, let’s take a look at my top stock to buy and hold for 2021.
High-value, long-term customers
Chewy.com (NYSE:CHWY) allows people to buy supplies for their pets online and have them delivered to their homes. The company was already growing fast but when the pandemic started and people wanted to avoid exposing themselves to the virus, sales only accelerated. In the first three quarters of fiscal 2020, its revenue is up by 46% from the previous year.
Many people have decided to get a pet to help them cope with increased loneliness during the pandemic. Importantly for potential investors, the average person in the U.S. spends over $1,100 per year on their pets. Combining that statistic with the fact that a pet is a long-term commitment for most people, and you’ve got yourself customers at Chewy.com with high lifetime value.
As of Dec. 8, Chewy.com has 17.8 million active customers, 40% more than it had at the same point last year. Those customers spent an average of $363 annually — a figure that is far below the overall average spending on pets per person in the U.S., giving the company the potential to increase sales to existing customers.
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