Whirlpool Corp (WHR)

(A Top Pick Aug 13/15. Up 9.48%.) A great name, but has had some volatility. She likes that they have a lot of stuff in their control. Made a couple of big acquisitions in Europe as well as in China, to grow their scale. They did this back in 2006 with Maytag, and took a lot of costs out of the system. The US housing cycle is helping them.

The leading global appliance manufacturer, and is developed and developing markets. 50% of revenues and about 7% of profits come from the US. Penetration rate in the US market is about 79%. The lifespan of appliances is about 10 years, so it is now going through a replacement cycle. Also, there is increasing housing turnover or renovation work. In emerging markets, penetration is about 30% in India and China, so there is lots of long-term potential for them to grow in those markets.

The world’s leading appliance maker. North America accounts for just over 50% of their earnings, with about 25% coming from Europe, 20% from Latin America and 7% from China. Penetration rate is about 79% in the US. Replacement sales accounts for about 50% of industry sales, and the company estimates that that peaked 2005-2006, and the average life for an appliance is about 10 years. Very long-term secular growth. Yield of about 2.3%.

(A Top Pick Aug 13/15. Up 2.13%.) It’s the housing side of things and consumer spending that is doing well in the US economy. The company is getting some product launches and some good momentum. Recently did acquisitions in Europe and China which are starting to do well. Also, has some Brazil exposure amounting to about 15% of its revenue. Still likes.

This is a play on the consumer, which is clearly slowly turning the corner and has been for some time. It is a very good company. Also, has a growing international presence. International sales are very fragmented without a lot of ownership, so it is a tremendous opportunity. Dividend yield of 2.03%.

(A Top Pick Dec 8/14. Down 22.62%.) This has a lot of great things going for it, which started showing up this quarter. About 12% of operating income is from Latin America with a large portion of that being from troubled Brazil. She likes this company because the really good spot in the US economy is their housing. This last quarter they have started to see a pickup. Also, initiatives in Europe and Asia are starting to pick up steam.

Likes it. It is a great housing play. They do have a fairly high foreign revenue component and the high US$ has hurt them. Long term they can move past that.

His model price is $146.96. Trading at about a 7% premium to where he thinks its value is. At worse, it could get down to $148.

Cutting its revenue forecasts because of foreign-exchange on the US$. They have said this will cut their revenue by $2.5 billion. If you liked it before you heard the news, then quite likely that should not be a major concern. If the organic numbers are still producing mid-single digit organic revenue growth, that is pretty good.

US is about 55% of their business. Thinks that most people have written off growth in other parts of the world because of currency headwinds and the challenges in emerging markets. This is why this is such a great buying opportunity at $165. It is very cheap. The strength in the North American market should more than compensate for some weakness that you are going to see in other parts of the world. Emerging market is going to represent a tremendous amount of long-term potential, because appliance penetration in those markets is very low. Dividend yield of 2.17%.

A housing play which is the part of the market that has been doing well with renovation and remodelling. They are expecting a lot more growth out of North America. Had some capacity constraint issues. Have new products coming online. What is really exciting is that they did 2 joint ventures in Europe and China. They have the ability to take costs out of the system and really rationalize things. The acquisition of Maytag in 2006 had zero revenue growth and they almost doubled EPS. They are very good at running businesses. Dividend yield of 2.06%.

(A Top Pick March 12/14. Up 40.4%.)Still cheap. Lots of big cap US holdings are over 20X earnings. Looking for this to go to $235-$250, which would still make it only 16 or 17 times earnings. A good, international bellwether. Still likes it.

(A Top Pick Jan 24/14. Up 37.88%.) A year ago, this was dirt cheap and it is still very, very cheap compared to the broader market. Still has a lot of room to run. An absolutely clean balance sheet, potential for margin expansion and operational efficiencies. This is a nice pick on consumer spending and an increase in household formation along with housing starts in the US. Pretty heavily leveraged to people buying appliances when buying a home or moving into order homes.

If you think about what the potential long range economic market scenario could be, the consumer is going to benefit big time and this one would benefit.

This company benefits tremendously from scale. Recently announced 2 joint ventures, one in Europe and one in China. If you look at what they did in 2006 when they acquired Maytag. That was sort of the peak in spending in consumer appliances, so there really hasn’t been any top line growth. What has grown is their bottom line, which is about 90% in a “no growth” environment. Have a tremendous amount of run room for many years. 1.6% dividend yield.