Three retail companies are identified as potential 2026 comeback stories despite underperforming year-to-date: MercadoLibre, a Latin American e-commerce and fintech leader with 39% YOY revenue growth; On Holding, a Swiss performance apparel company with 25% YOY net sales growth and strong Asia-Pacific expansion; and Chewy, a pet e-commerce leader showing improved profitability and expanding into vet care services.

Chewy shares rose 4.37% on Thursday following the announcement of Chris Deppe, an Amazon veteran with 16 years of finance experience, as the new Chief Financial Officer. The appointment is seen as strengthening the company's financial foundation and strategic positioning in e-commerce pet products, despite the stock being down 23% over the past 12 months and underperforming its peer group by 34.37 percentage points.

Chewy's heavily promoted 'Autoship customer sales' metric, which represents 84% of revenue, is misleading. The metric includes all purchases by customers who used Autoship at any point in the past year, not just actual recurring subscription sales. This obscures the true percentage of genuinely recurring revenue. While Chewy has positive attributes like growing active customers and attractive valuation, sluggish 8.3% revenue growth and weak 2.1% operating margins make it a difficult investment case.

The article recommends three discounted growth stocks: Chewy, which benefits from recurring subscription revenue (84% of Q3 revenue); Uber Technologies, which despite missing Q4 earnings expectations shows strong year-over-year growth and improving profit margins; and ServiceNow, a practical AI automation company down 50% from its peak but with consistent profitability and analyst price targets suggesting 78% upside.

Chewy stock has declined 80% from its 2021 peak due to a market bubble, but the underlying business continues to thrive with sales doubling to $12.6 billion and strong customer retention through its autoship program. Trading at 15x 2025 earnings with expected 18% annual growth, the stock may offer attractive long-term value after its dramatic correction.

PRISM MarketView launched the PRISM PetCare Index to track publicly traded companies driving growth in the global pet care sector, projected to exceed $350 billion. The index includes companies advancing veterinary services, pet pharmaceuticals, insurance, diagnostics, and premium nutrition. Key companies highlighted include Elanco Animal Health, Chewy, and Trupanion, which are positioned to benefit from increasing consumer spending on pet healthcare, preventative services, and subscription-based offerings.

Chewy stock has traded in a range for four years after a pandemic-era collapse, but the company continues steady financial growth with expanding business lines including veterinary telehealth and pet pharmaceuticals. With revenue up 8% year-over-year and operating income up 74%, the stock's valuation has become attractive, trading at a forward P/E of 17 and P/S ratio of 0.9, suggesting it may be poised for a breakout.

Chewy stock has fallen over 80% from its 2021 peak, but the article argues it may be worth reconsidering. The online pet supply retailer has recently turned profitable with 83.9% of Q3 revenue coming from subscription customers, demonstrating a sustainable business model. With a forward P/E of 22 and analyst price targets 60% above current levels, the stock could see a bullish reversal.

The Motley Fool recommends Chewy and Dutch Bros as top growth stocks to buy in February. Chewy, an e-commerce pet retailer, offers recession-resistant business with attractive valuation and margin expansion opportunities through sponsored ads, membership programs, and higher-margin private label brands. Dutch Bros, a regional coffee chain, is positioned for significant growth with plans to expand from under 1,100 locations to over 2,000 by 2029, supported by strong same-store sales and new hot food offerings.

The author recommends Costco Wholesale and Chewy as top consumer stocks to buy, citing their strong customer loyalty, recurring revenue models, and recent valuation declines. Costco benefits from high-margin membership fees and maintains 90%+ renewal rates, while Chewy generates 84% of sales through its Autoship subscription service and has launched veterinary clinics as a new growth driver.

Chewy stock presents an attractive valuation opportunity with its forward P/E ratio of 24 well below its five-year average of 73. Despite a challenging five-year performance with average annual losses of 21%, the company shows promise through steady revenue growth, expansion into pet insurance and telehealth services, strong customer loyalty, and an autoship subscription model providing recurring revenue.

Chewy is a successful e-commerce pet retailer with over 130,000 products, but the article advises caution before investing. While the company showed 8.3% year-over-year revenue growth in Q3 2025 with improving profit margins, structural challenges persist. With net profit margins around 2% and the entire pet industry characterized by low margins, Chewy's growth prospects appear limited. The author recommends staying on the sidelines until profitability improves and valuation drops.