The Bumpy Ride Continues with Whirlpool

Place Whirlpool Corporation (WHR), first discussed here on March 13, 2009, at a price of $34.47, in the not-for-squeamish-investors category.

Appliance manufacturer extraordinaire Whirlpool’s stock over-corrected last summer, formed a bear-hug, bottomed at/near $69.50, then recovered to about $90 during the winter — before recently sliding back to $84. Translation: a roller-coaster — something that one generally does not see with an industrial player. Even so, I still like WHR here. But hold on to your hat if you own the shares — the bumpiness could continue in 2011.

And if you haven’t already, consider taking some provides off the table with WHR, if you’re in at/near $34.50.

However, those investors who can tolerate the risk can maintain their full position to go for a possible larger gain, as WHR remains well-positioned to take advantage of emerging market growth.

Further, with the latter in mind, WHR should post a 3%-5% revenue increase in 2011, and a 7%-9% gain in 2012 — that, after a 7.4% revenue rise in 2010, led by strong demand for kitchen and laundry appliances in emerging markets. Latin America sales (especially Brazil) should be particularly strong — rising better than 10% in 2011 and 2012. U.S. sales should continue to gain momentum in 2011, with a 2%-4% rise expected.

Whirlpool’s product base is also in-sync with the trend towards energy-efficient appliances — a tailwind that would only grow if state/federal tax credits for energy efficiency increase.

The Thomson Reuters First Call FY2011/FY2012 EPS estimates for WHR are $11.77 to $9.60. That FY2012 EPS estimate looks about 5% low, according to my analysis.

Technically, as noted, in 2010 Whirlpool’s stock has undulated for about seven months, cycling between $70 and $93 — but the view from here argues the upside will prevail in 2011.

2011 Outlook: I view Whirlpool as a long-term play, but if you’re looking to sell WHR within the year, it’s probably best to take your profits after it rises to $95-$99, if it fails to clear $100.

Stock Analysis: I consider Whirlpool Corp. to be a moderate-risk stock. If an investor has already purchased the company’s shares, I’d hold them. If not, I’d consider buying a 25% position in WHR now; I’d put a sell/stop loss at $53.

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

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