Whirlpool sends bears down the drain

The international segment is humming. If the US rebounds, you'll have a $98 stock.

By Jim Cramer Feb 3, 2010 8:27AM

 Jim Cramer

By Jim Cramer, TheStreet

 

Here's the problem with the double-dip thesis: Whirlpool (WHR).


This appliance company is actually emblematic of a host of American corporations that have simply become too international to be considered domestic, and they're doing just well enough internationally that if the U.S. ever kicks in, you're going to pay 14 times a $7 number and have a $98 stock.

 

Yesterday's quarter was pretty breathtaking, with a business that the Street endlessly wanted Whirlpool to give up on, Brazil, causing a big upside surprise. Other developing markets, notably India, also played a role. After restructuring upon restructuring, this company had its highest cash-flow generation for a quarter ever.

 

And the U.S. did nothing.

 

Now, if you are a shadow-inventory-housing bear, you simply have to short this stock up 6 -- or, judging by yesterday's action, you WERE shorting it up 6 -- because integral to the totally accepted shadow-housing thesis is that we do not need to build homes and you need something besides just replacement to make the numbers hum.

 

Plus, a bear has to believe that there's going to be another leg down in unemployment, which would further dim the U.S. situation.

 

Find a new broker and start trading

 

But what happens if there isn't? This company, with its hammerlock on high- and low-end brands (a gift of a previous Justice Department that should never have allowed this merger), can print money.

 

I think the rosy scenario is going to play out here; the other-country diversification works until we get a U.S. turn.

 

That makes WHR worth owning and the bear case worth disowning even after yesterday's big run.

 

At the time of publication, Cramer had no positions in the stocks mentioned.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

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