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Whirpool: Spinning Profits
10/18/2016 7:00 am EST
Stocks in our Growth & Income Portfolio have bullish charts, good projected earnings growth, dividends of 1.5% and higher, low-to-moderate P/Es, and low-to-moderate debt levels, explains growth and income expert Crista Huff, editor of Cabot Undervalued Stocks Advisor.
Whirlpool (WHR) is the world’s largest appliance manufacturer. The company markets its products under many familiar brand names, including Whirlpool, Maytag, KitchenAid and Jenn-Air. Approximately 50% of Whirlpool’s revenue comes from expanding international markets.
But first, the numbers. Wall Street’s consensus EPS estimates reflect growth of 18.7% and 17.2% in 2016 and 2017 (December year-end), with corresponding P/Es of 11.0 and 9.4.
That’s really strong earnings growth for a blue-chip stock. WHR remains quite undervalued.
In April 2016, Whirlpool announced a $1 billion share repurchase plan and increased the quarterly dividend from $0.90 to $1.00 per share, currently yielding 2.5%.
WHR has huge and very tradable price swings. I recommend WHR last fall, when the price was down 35% from its 2015 high of $217. In early 2016, WHR rose from a low of $123 in January to a high of $193 in April. Wow!
I told investors several times in April and May that the share price was peaking and needed to pull back. The price correction arrived promptly, with WHR dipping below $155. Four weeks later, the price surpassed $190 again.
The stock is now experiencing its third price correction from 2016 highs. Odds are very strong that the next move is up! A move back to the low $190s would give today’s investors a 20% capital gain.
By Crista Huff, Editor of Cabot Undervalued Stocks Advisor