Quality Funds Are Still Buyers Of Whirlpool Shares


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 ( WHR ) swung around the pack for a 114% gain.

Is the move over for Whirlpool?

Several factors would suggest that Whirlpool has further to go.

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 selling.

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 America.

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 production costs.

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 1.9%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas

Referenced Stocks: WHR

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