Tag Archives: Whirlpool Corp

Jim Cramer warns even high quality low price-to-earnings stocks could get beaten down by a recession

CNBC’s Jim Cramer warned investors on Wednesday that while there are some stocks with low price-to-earnings multiples that look cheap and therefore investable, it’s worth noting that they aren’t always recession-proof.

“There are stocks with insanely low price-to-earnings multiples that can’t be bought under any circumstances,” the “Mad Money” host said. “Then there are the higher-quality ones that you can justify owning if you feel a little more sanguine about the economy.”

Cramer highlighted Nucor, Toll Brothers, Ford and Whirlpool stocks that have low price-to-earnings multiples and could be great bets if the economy stays stable. 

However, because these stocks have toppled before during the height of the pandemic, it’s possible they will continue to fall if the market doesn’t recover, Cramer said.

“If we get a steep recession, all four could go much lower. Keep that in mind if you take the risk,” he said.

Cleveland Cliffs is a stock with a low price-to-earnings multiple that investors should avoid completely, he added, predicting that the stock has more downside to it.

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“When you buy a stock with an extremely low price to earnings multiple and yet the darned thing still goes down, that’s because these stocks only look cheap thanks to the fact that the earnings estimates … are too high,” he said. “They can go lower and then lower and then lower.”

Disclosure: Cramer’s Charitable Trust owns shares of Ford.

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Best Buy adds beauty gadgets and outdoor furniture to product lineup

Electric bikes. Patio furniture. Beauty gadgets.

Best Buy is adding merchandise that might surprise shoppers who typically think of its stores and website as a place to buy smartphones, laptops and TVs.

The company said Friday it has begun to carry about 100 skin-care devices, including a facial steamer and at-home tool for microdermabrasion, at nearly 300 stores and on its website.

Best Buy is making a broader push into categories such as fitness and furniture as it looks to propel growth beyond the Covid pandemic. The company benefited from early pandemic trends, as people sought computer monitors for home offices, kitchen appliances for more at-home cooking and theater systems or giant TVs to pass the time.

Now, however, the retailer faces a more challenging landscape. It cautioned in March that it expects a same-store sales decline of between 1% and 4% in the coming year after a period of very high demand.

There are already signs of softening electronics sales, as consumers direct dollars toward vacations and social events. Major appliance maker Whirlpool missed on estimates and saw sales drop 8.3% in North America in the most recent quarter versus the year-ago period, the sharpest decline since the pandemic began. Microsoft, which produces Xbox video game consoles, gave a negative outlook for the coming quarter with projected declines in the gaming category.

The NPD Group, a market researcher, projected that revenue from consumer electronics in the U.S. will fall by 5% in 2022, 4% in 2023 and 1% in 2024 — but said total sales will remain higher than pre-pandemic levels. The declines follow a record-setting year for the industry in the U.S. with consumer tech sales hitting almost $127 billion, a 9% jump over the elevated sales in 2020, NPD Group said.

Read more: Surging prices force consumers to ask: Can I live without it?

Some of the new items cater to consumers’ going out and getting social again — such as electric scooters, according to Best Buy’s chief merchandising officer, Jason Bonfig.

The retailer has expanded its merchandise offering in recent years. Best Buy debuted connected fitness products from exercise brands including NordicTrack and Hydrow in summer 2019. It rolled out outdoor grills from Weber and Traeger in June and a line of electric bikes, scooters and mopeds in August. It acquired Yardbird, a direct-to-consumer outdoor furniture company, for an undisclosed sum in November.

Best Buy has also bought health-care companies, including GreatCall, which sell devices and services that help older adults age in their own homes. It is testing services related to new products, too, such as a pilot program to offer repair services for e-transportation products.

Bonfig said in an interview with CNBC that the company has taken cues from customer and employee feedback — and clicks and searches on its website. For instance, he said, some shoppers would ask employees about outdoor furniture when buying a TV or audio equipment for the backyard.

“Our answer in the past has been ‘No, we actually don’t have an assortment of that,'” he said.

Now, with Yardbird, it does. This month, Best Buy added displays at one of its namesake stores and a handful of locations under the Best Buy subsidiary, Pacific Sales Kitchen & Home in Southern California. Customers can also buy outdoor sofas, wicker chairs and more on Best Buy’s website.

This year, the retailer plans to add Yardbird and e-transportation displays to about 90 stores, nearly 10% of its approximately 1,000 U.S. store footprint. More than 250 of its stores currently have fitness equipment and Best Buy plans to add a larger, more premium experience for those products in about 90 stores.

Best Buy does not break out revenue by merchandise category, but emerging areas have been a powerful driver of sales, the company has said. At an investor day in March, Bonfig said most of Best Buy’s over $12 billion in sales growth in the past decade has come from large established products like computing, TV and appliance, but one-third has come from newer groups such as wearables and virtual reality headsets.

Bonfig declined to tell CNBC specific growth numbers, but said the younger categories are resonating. And he said one of the skin-care devices it started to offer, the TheraFace Pro, has been a “breakout hit.” It sells for about $400, with features for cleansing and infrared light therapy. He said the products cater to consumers’ interest in health and wellness.

Michael Baker, an equity research analyst for retail at D.A. Davidson, said adding merchandise groups fits with the company’s history. With the moves, he said Best Buy can stay on the leading edge, expand its total addressable market and capture a larger share of consumers’ disposable income.

His price target for the company is $135, about 46% above where shares are currently trading.

The biggest risk, he said, is Best Buy could buy the merchandise only to see it linger and wind up marked down.

Baker said moderating sales may free up time and allow Best Buy to get creative in how it merchandises and promotes different kinds of items.

“There was such a focus on being able to fulfill demand for work from home, learn from home, play from home type products,” he said. “With those slowing, it gives them a chance to see where they can go from here.”

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Whirlpool CEO says company is coping with inflation challenges

Whirlpool is handling inflationary pressure and has seen supply chain shortages start to ease, CEO Marc Bitzer told CNBC’s Jim Cramer on “Mad Money.”

“Inflation challenges are real, but I think we’ve been able to demonstrate we can cope with them,” Bitzer said Monday. “Covid-induced inflation, I think we had a pretty good sense and we dealt with it very well. And we also thought we had a pretty good grip on inflation coming into this year.” 

Whirlpool missed Wall Street expectations on first-quarter sales and earnings, according to Refinitiv. Shares of the company rose about 2% during extended trading following an initial dip.

Bitzer said that Whirlpool is expanding capacity in the U.S but still expects industry-wide supply shortages to last through the rest of the year.

“I still believe in the future of American manufacturing going forward. We’re not going to change our mind,” he said. 

“Shortages will be around this industry probably for the entire ’22. However, they start easing. We start seeing them easing so it’s getting better, but it’s been a painful two years, to be honest,” he added.

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Stocks making the biggest moves midday: Didi, Diamondback, Whirlpool

A navigation map on the app of Chinese ride-hailing giant Didi is seen on a mobile phone in front of the app logo displayed in this illustration picture taken July 1, 2021.

Florence Lo | Reuters

Check out the companies making headlines in midday trading.

Didi — The sell-off in the Chinese ride-hailing company continued with shares falling more than 5%. On Tuesday, Didi shares sank nearly 20% after Chinese regulators announced a cybersecurity review of the company, less than a week after Didi’s public debut on the New York Stock Exchange.

Nio, Pinduoduo, Baidu and Alibaba — The U.S.-traded shares of several other Chinese companies also continued to retreat on Wednesday. The electric vehicle company Nio dropped more than 6%, online agriculture marketplace Pinduoduo fell about 3%, search giant Baidu is down 1.9% and Alibaba slipped about 1%.

Diamondback Energy – Shares of the exploration and production company slid nearly 3% amid continued weakness in oil prices. West Texas Intermediate crude futures dipped more than 2% during volatile trading on Wednesday, weighing on the energy sector broadly. Valero, Occidental and Halliburton all shed over 2%.

Whirlpool – Shares of the home products company rose 2.5% on Wednesday after JPMorgan named Whirlpool a top pick. The firm said in a note to clients that Whirlpool was a “hated” stock on Wall Street but was primed to beat expectations in the quarters ahead, creating upside potential for investors.

Beyond Meat — Shares of the plant-based meat-substitute maker fell 3% in midday trading after CRFA downgraded the equity to a hold rating from a buy rating. CFRA said in its downgrade of the stock that it sees a more “balanced” risk/reward in the current market environment.

Boston Beer — Shares of Boston Beer added 2.6% after Credit Suisse upgraded the stock to outperform from neutral. The firm noted that the Truly hard seltzer brand could boost the stock’s performance. Credit Suisse also hiked its price target to $1,490 , roughly 61% higher than the stock’s Tuesday close.

— CNBC’s Jesse Pound, Pippa Stevens, Yun Li, Tanaya Macheel and Tom Franck contributed reporting

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