How long are you willing to wait for a turnaround?

No doubt about it, shares of Whirlpool (WHR) are cheap, trading at 7.9 times trailing-12-month earnings per share.

But last Wednesday's earnings report for the third quarter was depressing. Including all items, the company reported earnings of $1.02 a share, down from $1.15 in the third quarter of 2009. Excluding these special items, earnings came to $2.22 a share, but that was below the Wall Street estimate.

Sales grew by just 0.5% -- seriously below the 14% sales growth reported in the first half of the year.

The big problems were in the company's business in developed economies. Revenue in North America fell by 3%, and revenue in Europe dropped 8%. Hefty revenue gains in Latin America (13%) and Asia (21%) weren't enough to offset those drops, since developed-economy revenues at $3.23 billion are far bigger than Latin American and Asian revenues at $1.3 billion.

Now, at some point, Whirlpool's developed-economy sales will pick up. But it doesn't look like that will happen anytime soon. The company cut its forecasts for full-year 2010 U.S. unit sales growth to 3% from a previous 5%. 

Whirlpool's recovery will probably track the recovery in the U.S. housing market very closely, and that recovery looks further away this week with the disclosure that mortgage-documentati​on problems were slowing foreclosures to a snail's pace. (For more on the slow rate of foreclosures, see this post.)   

Housing prices and homebuilding activity won't recover until the market clears the huge backlog of foreclosed homes. So the delays in the process caused by improper bank paperwork that has forced banks to refile hundreds of thousands of foreclosures has extended the woes in the housing sector -- and for stocks such as Whirlpool that sell into that market. 

There wasn't much hope for Whirlpool in the Oct. 29 gross domestic product numbers, either. Residential investment -- GDP speak for housing activity -- was down 29% in the quarter. 

If Whirlpool paid more of a dividend, I think I'd be inclined to hold the stock for the eventual recovery in the sector. But the stock yields just 2.25% -- and that's not enough, considering how long I'm likely to wait. I'd get interested in this one again if it dropped below $65 or if the calendar read May instead of October. (It traded above $77 Tuesday.) 

As of Nov. 2, I'm selling Whirlpool out of Jubak's Picks with a loss of 23% since I added it to the portfolio on May 7, 2010. 

At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here.