Short Whirlpool (WHR) for Minimum 30% Return
Posted on: Sep 11th, 2008 | By Adam Lass | Filed under Featured, Financial News
As the housing market slumps it should take anything related to building or furnishing with it.
However, the stock of home appliance maker Whirlpool (NYSE:WHR) has risen 6.4% in the year to date despite razor thin margins and a wider downturn.
Wave Strength Options Weekly editor Adam Lass says this is a great opportunity to make at least 30% with a simple short play.
Buying strategic put options could increase these gains up to 118%.
More from Adam in today’s Taipan Publishing:
My partner Bryan Bottarelli’s analysis of Whirlpoolmakes perfect sense:
When I look at Whirlpool’s business model, I see a company with a $6.64 billion market cap, trading at a P/E ratio of 12.19, while making a razor-thin profit margin of 2.89%.
In strong economic times, making 2.89% on a high-ticket item like appliances makes you a lot of money. But in the heart of a market recession (like we have right now), I can’t see a company like WHR being able to maintain any upside momentum.
After all, millions of unsold U.S. homes are currently sitting on the market with brand-new WHR appliances. I would think that the market needs to work through this inventory before WHR can think of receiving a substantial amount of new sales. And therefore, the forward outlook, to my eye, is very weak.
Now WHR stock is a bit of an oddity right now. Most everyone else connected with the housing and home wares biz have been well and truly stomped on.
You wouldn’t expect a builder like Lennar (NYSE:LEN) to be up, and indeed it is not. You wouldn’t advise a friend to buy shares of a joint that sells nails and furnishings like Home Depot (NYSE:HD).
But WHR is still vainly trying to hold on to its 2008 highs. My Wave Strength Options Weekly charts tell us that even a simple short play ought to be good for some 30% gains over the next few months.
However, the puts that Bryan and I recommended to WOW readers stand to gain as much as 118% off that same 30% drop.
Certainly something to cheer you up as you fold the wash, eh?
Source: Can Long Lines, Broken Machines and a Botched Election Sell Dishwashers?
Adam Lass is the creator of the 
WHR also makes weapons. The war will give them profit.
I’ve been with WHR for almost 38 years, and can’t think of any of our locations that manufacturer “weapons” as the first reply states.
Although, you must remember that WHR is not just an American company. We manufacture all around the world. A large play was made last year to short WHR just as our quarterly profits were posted. The stock shot up $8, as the players were just thinking about what was going on in America. I made some money as WHR has moved up since mid July, and I am out right now. But I am not saying that I would not buy on a pull back. Good luck with your trading!