Whirlpool Corp (WHR)

It is a global franchise. It has gone through a tough period. Unit sales projection slipped. It is 10 times earnings and 9 times future earnings. The risk is taken out of this stock. There is a 10 year recycling of appliances. (Analysts’ target: $187.00).

Housing starts are coming along nicely. Household formations are changing and millennials are starting to buy their own homes. He prefers HD-N for this play because it is a retailer that covers many different aspects of the whole package. It will grow its dividend and internal measurements.

(A Top Pick Oct 12/16. Up 12%.) The world’s largest appliance manufacturer. In developed markets, it is more of a replacement demand and there was a replacement cycle going on. They recently won a ruling on antidumping by 2 of their largest competitors. In emerging markets, the penetration of appliances in households is very low compared to the US, and she is expecting increased demand for appliances.

He continues to like this. Trading at only 14X earnings. Had some recent disappointments. Anticipated the appliance market would grow 4%-6% this year, but it looks like it is going to grow at only 3.5%. This market doesn’t like disappointments. He likes that he is getting a global franchise that has a reasonable currency play because of the weakness in the US$. A well-run company.

(A Top Pick Oct 3/16. Up 12.13%.) He likes its discipline and its discipline of returning money to shareholders. The balance sheet continues to get better. A great, global franchise.

(A Top Pick July 12/16. Up 14%.) A global appliance manufacturer. 70% of its profits come from North America with the balance from Europe and emerging markets. This is a play on repair/renovations, housing turnover, appliance age. Trading at a pretty attractive multiple. In emerging markets, appliance penetration is much lower than in the US. In China it’s 36% and in India it is below 20%. There is lots of room to grow in those markets.

(Top Pick Jun 14/16, Up 15%) Number one appliance manufacturer in the world. It is basically a replacement demand market, mostly from North America. The average appliance is designed to last about 10 years. There is a lot of room around the world to add appliances.

(A Top Pick March 29/16. Down 3%.) A great company and has had a very strong track record up until recently. His thesis was that family formation would finally pick up. That trend really hasn’t happened. Instead we are seeing an opposite trend where people want to live in the core. He sold his holdings.

There is currency impact on their earnings. They have onetime write-offs. There was a recent ruling against the US and pro Korea where they pay subsidies to manufacturers. He is looking for single digit growth in units, but about 1% around the world. They were a couple of cents light from street consensus in earnings.

He likes it very much. It has been quite volatile. It is growing quite smartly. A few things are getting away including that a lot of business comes from internationally and the strengthening US dollar does not help. The world trade organization ruling went against them but he thinks it will be short lived. They have good management and it is a good entry point at this valuation.

They had a slip up in the last quarter. It is a name that is solid. It will always come back. Don’t buy it here because there is no catalyst.

51% of revenues come from US, where they get revenue from the repair, reno, and replacement cycle.

Reward with minimal risk. It is number 1 in all 4 of its markets. Its second half will be improved due to a currency tail wind. 10 times earnings and a 2.8% yield.

(A Top Pick Sept 8/15. Down 0.9%.) An interesting company, and a tale of 2 economies. They get about half their sales from the US and the other half comes from international markets that have been challenged. This is a nice way to get exposure to emerging markets through a developed market company.

He likes this sector because of demographics. The millennials are going to take over from the baby boomers as the biggest demographic in society. These are 30-year-olds that are going to have to buy appliances, buy homes, have families. There is going to be a mountain of demand come out of this. A very well-run firm.