Whirlpool knows emerging markets are appliances' new frontier

Posted Aug 11th 2009 5:00PM by Joseph Lazzaro
Filed under: Stocks to Buy

I'm Reiterating my Buy rating for Whirlpool (NYSE: WHR), first recommended on April 13, 2009 at a price of $34.47.

If you managed to Buy WHR in April you're up a gargantuan 69%. Whirlpool's shares are a tad overvalued right now, but that does not change the growth story. Emerging market sales, particularly in Latin America, are sending signals of increased demand for appliances; Europe and the U.S. sales may lag for 2-3 more quarters.

In sum, the appliance party continues, but new investors should wait for a pull-back to the $53-56 range. However, keep in mind that Whirlpool's shares may not retreat to that level. The First Call FY2009/FY2010 EPS estimates for WHR are $3.90 to $4.46.

Stock Analysis: Whirlpool is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in WHR now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your WHR position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $17.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: inthenews, Whirlpool, WHR