One of my favorite things while I'm shopping is to find a sale on an item that I know is worth more than it's being sold for. The same thing can be said about stocks. With the high volatility of the market, great companies are often unfairly punished because of fear. Sometimes the fear is warranted, but in other cases, fear is a "sale" opportunity for Foolish investors. Enter Whirlpool (NYS: WHR) .
You spin me right round, baby, right round
It's no secret that the United States has been through a tough few years. Recession, fear of another recession, budget problems, and other issues, have understandably eroded consumer, as well as investor, confidence, leading to a decreased demand for products.
Whirlpool, a manufacturing and home-appliance giant, is just one company that's been hit with decreased demand, and this has lead to a decrease in its stock price. However, Whirlpool has two things going for it that allude to a pretty bright future.
First, Whirlpool's brand is rock-solid. When you think of quality home appliances, Whirlpool definitely comes to mind. Plus, you can find it in almost every major electronics retailer, including Best Buy (NYS: BBY) , Wal-Mart Stores (NYS: WMT) , Lowe's (NYS: LOW) , and Home Depot (NYS: HD) , which helps drive profits not only for Whirlpool but for the electronics retailers as well.
Then there are Whirlpool's other brands, which include Maytag, KitchenAid, Jenn-Air, and a plethora of other quality names. With such strong branding behind it, it's going to take more than a recession to knock out this giant.
Second, although Whirlpool took a hit in 2009 with the rest of the economy, it's managing to spring back. Since 2009, Whirlpool has increased its gross margin from 13.5% to 14.4% in 2010, net income has increased from $328 million in 2009 to $619 million in 2010, and, as an added benefit, Whirlpool pays a dividend yield of 3.8%. Plus with a stock price of $53.36, Whirlpool is trading near its 52-week low, which is great for investors looking to get in while the stock is on sale.
Whirlpool and the future
Whirlpool's comeback is not going to be overnight. In fact, it could take months or even years to fully rebound, as it is highly dependent on the economy. However, with that being said, Whirlpool has solid branding and solid financials, and it's been around since 1898, so it's seen and weathered this type of storm before.
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At the time thisarticle was published Fool contributorKatie Spencelikes to watch laundry spin in a dryer. She owns no shares of any company mentioned above. The Motley Fool owns shares of Wal-Mart.Motley Fool newsletter serviceshave recommended buying shares of Wal-Mart, Lowe's, and Home Depot, creating a diagonal call position in Wal-Mart, and writing covered calls in Lowe's. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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