A rectangle pattern has formed in the chart of Whirlpool Corp. (WHR). A rectangle pattern is formed when resistance level and a support level is formed, thus creating a trading range for the stock.
WHR is a U.S.-based global manufacturer and marketer of major home appliances and related products. It markets brands including Whirlpool, KitchenAid, Maytag, and more.
The company has been gaining from strong demand for home appliances and kitchen products. WHR is seeing growth in the Latin America and Europe, Middle East, Africa (EMEA) regions. Management has even revised its full year guidance for 2020.
WHR has a healthy balance sheet with $3.5 billion in cash, up 38.6% since the previous quarter. The company also has a current ratio of 1.0, indicating it can meet short-term obligations. In addition, its return on equity of 25.9% suggests it’s increasing its profit generation without needing as much capital.
While the stock’s growth in both earnings and sales are down over the past year, the company has been beating analyst expectations over the past few quarters. The stock looks undervalued with a P/E of 14 and a Price to Sales of 0.6.
While the stock is down over the past month, it has shown bullish near and long-term momentum. This has led to a “Strong Buy” rating in our POWR Ratings system. This is reflected in its chart below.
Take a look at the 1-year chart of WHR below with added notations:
Over the past few months, WHR has rallied up into a sideways trading range and a rectangle pattern has formed. While in the range, the stock has formed a resistance level at $205 (red), and a level of support at around $180 (green). At some point, the stock will have to either break the $205 resistance or the $180 support.
The possible long position for this stock would be on a breakout above $205. The ideal short opportunity would be on a break below $180.
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WHR shares were trading at $191.62 per share on Monday morning, down $1.58 (-0.82%). Year-to-date, WHR has gained 34.32%, versus a 17.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock.
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