Pet stocks such as Chewy (NYSE:CHWY) and Pet Valu (TSX:PET) have significantly underperformed the broader markets since their respective initial public offerings. Chewy went public in June 2019 at US$22 per share. Today, it trades 75% below all-time highs. Similarly, Pet Valu was listed at $20 and went public in June 2021. Today, it trades 40% below record levels.

These pet stocks are part of expanding addressable markets that are fairly recession-proof. So, let's see which growth stock is a good buy right now.

Is Chewy stock a good buy today?

Valued at a market cap of US$12.5 billion, Chewy provides pet food, treats, medications, and other pet health products on its online platform. With more than 100,000 product listings, customers can choose from over 3,000 partner brands on Chewy's mobile application and website.

Chewy's sales have increased from US$4.84 billion in fiscal 2020 (which ended in January) to US$11.3 billion in the last four quarters. Like other growth companies, Chewy has focused on improving its profit margins amid slowing sales and a challenging macro environment. In the last year, Chewy reported an operating income of US$65 million, compared to a loss of US$23.6 million in fiscal 2024 and US$253 million in 2020.

Chewy has a robust business model. In the fiscal second quarter (Q2) of 2025, it generated nearly 80% of its revenue from Autoship customers. The Autoship program is a subscription service for pet owners that allows them to schedule automatic deliveries of several products. While the Autoship program provides customers convenience, it enables Chewy to earn a steady stream of subscription income.

Moreover, 85% of its sales in the last year were derived from essential items, including pet food and pet health products.

Chewy's sales growth is decelerating, which might make investors nervous. In the last 12 months, its sales grew by just 4.4% yearly, compared to 10.2% in fiscal 2024 and 25.5% in 2022. However, the pet food giant is reporting consistent profits and ended the last quarter with a free cash flow of US$91.5 million. In the last 12 months, its free cash flow has grown to US$260 million, up from US$120 million in fiscal 2023.

Priced at 33 times forward earnings, CHWY stock trades at a discount of less than 5% to consensus price targets.

Is Pet Valu stock undervalued?

With a market cap of $1.85 billion, Pet Valu is much smaller in size than Chewy. It ended 2023 with more than $1 billion in sales, up from $573.5 million in 2019. Unlike Chewy, Pet Valu reports a consistent profit and pays shareholders a quarterly dividend of $0.11 per share, which translates to a yield of 1.70%.

Its free cash flow in 2023 totalled $78.1 million. Given its outstanding share count, Pet Valu's annual dividend expense amounts to $31.5 million, indicating a payout ratio of just 40%. However, the TSX stock has underperformed in recent years as its free cash flow has narrowed from $106.6 million in 2019.

Pet Valu is Canada's largest specialty retailer. It sells its products via a network of retail stores and on its website. With more than 805 stores in Canada, Pet Valu commands an 18% market share in the country.

Priced at 16 times forward earnings, PET stock trades at a 20% discount to consensus price target estimates.