Actions of soft (NYSE: CHWY) have not kept up with the wider market rise in 2021. This could, however, prepare investors for excellent long-term returns from here on out.

In this “Beat & Raise” video, broadcast on December 10, Fool contributors Rachel Warren and Demitri Kalogeropoulos discuss Chewy stocks and describe some great reasons to love stocks at today’s prices.

Demitri Kalogeropoulos: We had a specific Chewy question. Vihan says, this is especially for you, Rachel, but I’ll try this one first if you want to think about it. “With the information you have today on Chewy, would you consider taking a position on Chewy?” If you don’t have one, what if you have another stock that you can also mention? I would say I’m fairly new, haven’t followed Chewy in a long time. Personally, I haven’t watched it. I saw a lot of things that I like about this report. Growth is strong, the market is good. It has a fairly dominant position, especially in the field of electronic commerce. It is very well positioned in a niche of a growing market, which is great. You would like to see customer engagement numbers increase, which they are. You like to see average expenses go up, which they are. You can see, as we talked about earlier, I can imagine this happening for a long time as people spend more money on pet food. I like the recession resistant part of stocks.

These are all excellent factors, plus the fact that the [laughs] the share price has fallen a little, so it is for sale, [laughs] which is cool. Like Rachel said before, if there’s a downside to that right now, I mean clearly, it’s not yet profitable on a net basis, and the gross margin, which you just mentioned, is weak. It’s hard to imagine how profitable Chewy will be in the long run right now.

That’s the big multi-billion dollar question because, and it’s going to depend on that gross margin figure. I was just making a comparison and it’s obviously not a very apple-to-apple comparison, but Tractor supply (NASDAQ: TSCO), which sells a lot of pet and animal products, and they have huge digital space, but also a really big retail side – their gross profit margin is somewhere in that 35% range. So 5, 6, call it 8 percentage points more than Chewy now. But Tractor Supply has been doing this for longer, and I think it has a bigger revenue base, which makes sense. But if you can see a world where Chewy hits that level, then they could easily be very profitable. And I think it could be a great long term investment in this scenario. But curious what your thoughts are.

Rachel Warren: I know these are good thoughts. I honestly agree with everything you’ve said. I cannot give stock buying advice. I would keep my personal opinion on this company for the moment: I am not currently a shareholder. I’ve talked about it a lot this week, so I couldn’t buy it right away anyway if I wanted to. But I’ve gotten to know the company a lot better over the last week, especially since I’m studying it for these different shows, and I’m very interested in it. That’s something I said on Monday, and we took a deep dive into the business. I think if you are a more risk tolerant investor, a small position, at least for now, in a company like this balanced by a portfolio of a wide range of other stocks in different sectors and different market caps, I definitely think it’s worth a look.

This is the one I’m actually looking at for my particular portfolio. Not just because it’s trading on the sell side, because we know the stock price isn’t the only metric you need to look at before you buy, but I think the company as a whole is solid. I understand some of the concerns about profitability. As I mentioned, I like the fact that the company is constantly reducing these net losses. I think that’s remarkable considering it’s a tough business environment right now. With all the money she’s spending to build her distribution centers and attract new talent to staff the company, I think it’s worth noting. I really think it’s a must-watch and maybe a peek for sure.

Demitri Kalogeropoulos: The other thing I would add is that, personally, if you are a client of Chewy’s, I also feel like this is a very good reason to consider buying the stock. This is my first couple of actions. were definitely, if you like the business, you like the brand, and you want to be a part owner, I think one of the first that I bought [Amazon‘s (NASDAQ:AMZN)] Whole Foods was one of my first stocks. I bought Marvel, which ended up being bought by Disney (NYSE: DIS), and that’s how I own Disney. But basically, for all the reason, I just remember being in awe of their business and then being really happy to watch, go see a Marvel movie and be like, “OK, I own 100 millionth of percent of that. [laughs] I don’t mind paying the ticket price. “

Rachel Warren: Oh no absolutely, and just like when I bought my first shares, if it wasn’t a company that I was a client of, it was one that I knew very well. I think it’s important to note that if you’re considering this venture, take a look at some of the filings, take a look at some of those reports, and see if that might align with your personal investment goals.