Whirlpool (WHR) As 2022 Investment Idea: Mixing Together Multiple Tailwinds
2:38 pm Monday, December 27th, 2021
With the final week of 2021 upon us, we wanted to profile potential stocks to consider heading into the new year. As housing prices climb and more employees work from home, we think Whirlpool (NYSE:WHR) will be a solid beneficiary of these trends in 2022.
The manufacturer of household appliances (i.e., laundry machines, refrigerators, etc.) which also operates under the brands KitchenAid and Maytag, managed to deliver solid quarters in a year mired by labor and raw material shortages. Despite these headwinds possibly lingering throughout 2022, there are secular tailwinds at WHR’s back, contributing to why we like the stock in 2022.
The demand for housing should contribute nicely to WHR’s bottom line in the new year. The company noted the pent-up demand from the millennial generation factoring into the boom. This is backed up by multiple home builders, such as Lennar (LEN), which pointed to the younger generation beginning to form families and entering prime homebuying years. KB Homes (KBH) expressed similar views and stated that there isn’t enough supply to meet the demand for millennials and Gen Zs, which should keep prices elevated.
Along with the younger generation purchasing homes, older generations are also entering retirement at an accelerated pace, possibly ignited by the pandemic. For example, Pew Research Center noted that in the third quarter of 2021, 2.2% more adults over 55 retired from the workforce than in 2019. We think many recent retirees will be looking to move out of their current homes, which tends to accompany upgraded appliances as they look to newer homes and condominiums.
The pandemic also created a rapid rise in remote work. As such, consumers have been investing more in their homes, and kitchen remodels have become quite popular. Also, with more individuals working from home, appliances are being used more often. Higher frequency shortens the upgrade lifecycle, boding well for increased sales going forward.
Lastly, with e-commerce seeing a sizeable boost from the pandemic, WHR has taken advantage of this through its direct-to-consumer (DTC) business, which already represents about a $1 bln. The company expects the ongoing shift to digital to help contribute to annual growth rates of over 25% in the long term.
