When stocks are plummeting in price, it’s hard to start buying into all the uncertainty. But a disciplined long term investor knows there’s no better time to buy than right now. And I’m not talking about buying into speculative, high-risk stocks. I’m talking about the well-proven, robust track record Whirlpool of India Limited. Why? Size. Financial health. Proven performance.
Whirlpool of India Limited manufactures and trades in home appliances under the Whirlpool brand in India and internationally. Formed in 1960, and led by CEO Sunil D’souza, the company provides employment to 1.81k people and has a market cap of ₹192b, putting it in the mid-cap group. Size matters. The bigger the company is, the more well-resourced it is. The more money it produces from its operations which means it is less reliant on external funding. When times are bad in the market, being self-sufficient is extremely important as you can continue to operate at your own pace. Therefore, large cap companies are a great bet to invest in when you’re heading to the bottom of the cycle.
Having high levels of debt can put pressure on companies during downturns since they have to continuously service their debt payments and interest costs. This means they need to maintain enough cash-on-hand for these expenses as well as maintain a cash cushion for unforeseen circumstances, which can get costly. In Whirlpool of India’s case, they have no debt on the books, which eliminates short-term debt pressures highly-levered companies may face. Also with a current cash holding of ₹9.9b, Whirlpool of India’s cash position is within a healthy range and more than sufficient to cover other upcoming liabilities, which means WHIRLPOOL is financially robust in the face of a volatile market.
WHIRLPOOL’s profit growth over the previous five years has been positive, with an average annual rate of 21%, outperfoming the market growth rate of 17%. It has also returned an ROE of 20% recently, above the industry return of 13%. This continuous market outperformance demonstrates a strong track record of delivering robust returns over many years, raising my confidence in Whirlpool of India as a long-term hold.
Next Steps:Whether you’re convinced or not, the key takeaway here is that every stock gets hit in a bear market, but not every stock deserves the blow. When prices are dropping like flies, now is the time to do your research and buy at a discount. Whirlpool of India tick the boxes in terms of its scale, financial health and proven track record, but there are a few other things I have yet to consider. Below I’ve compiled a list of factors for you to continue your reading before you buy:
- Future Outlook: What are well-informed industry analysts predicting for WHIRLPOOL’s future growth? Take a look at our free research report of analyst consensus for WHIRLPOOL’s outlook.
- Valuation: What is WHIRLPOOL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether WHIRLPOOL is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.