As the housing market recovers, household appliance makers are
riding in the draft.
Last year, the homebuilder industry group rose 45%, while the
appliance group advanced 22%.
Yet within the appliance group,Whirlpool (
) swung around the pack for a 114% gain.
Is the move over for Whirlpool?
Several factors would suggest that Whirlpool has further to
First, the stock is attracting quality fund support. In the
third quarter, Vinik Asset Management added to its position,
while CGM Focus Fund opened a new position. In Q4, Fidelity
Contrafund and Magellan opened new positions.
These aren't the kind of fund managers an investor would want
to bet against.
Second, the appliance industry group is a market leader right
now. As of Monday's IBD, the Household-Appliances/Housewares
industry group was No. 13 of 197 groups.
Third, Whirlpool is still fairly young in its base count. The
stock cleared a first-stage cup-with-handle pattern in August.
Recently, Whirlpool peeked above a second-stage flat base as it
punched to a new high Wednesday in volume 26% above average.
The stock retreated back under the 104.31 buy point in
extremely quiet trade. A retreat in soft volume is preferable to
losses in fast trade. Heavy volume would point to institutional
Still, buying a stock on a breakout that involves volume that
is less than 40% above average is not ideal. Look for a second
move in strong volume.
The company makes refrigerators, washers and dryers and other
appliances. Whirlpool has a long geographical reach. About 54% of
Q3 revenue came from North America and 27% from Latin
In December, Whirlpool won a U.S. government decision against
washing machine imports from South Korea and Mexico. Some imports
reportedly involved dumping units in the U.S. at prices below
Whirlpool is a turnaround company. After a 74% earnings
decline in 2011, the Street expects a 240% gain for 2012 and a
31% pop this year. The stock's annualized dividend yield is