Whirlpool Corporation (WHR), Saia Inc (SAIA), AEP Industries (AEPI): Stocks Showing Serious Bubble Symptoms

Page 1 of 2

“Maybe history does not repeat, but it certainly rhymes!”

-Mark Twain

The market’s present status quo is one of omnipresent exuberance, characterized by an overall bullish investing mood and supported by the Dow, DAX and other indices continuously hitting record highs. Ever since the trough of March 2009, the only direction for markets has been up and counting. With the VIX around 11, i.e. the lowest level since December 2006, investors are being lulled into safety and risk taking.

Whirlpool Corporation (NYSE:WHR)

Neither earlier nor the most recent economic data confirm the much anticipated and hoped for recovery, but this does not seem to spoil investors’ appetite in the least nor hamper the continued upsurge of bourses worldwide. Even the worrying fact that margin lending has now reached an alarming record high of $384 billion compared to prior highs of $381 billion back in July 2007, and similar levels in early 2000 before ending the dot.com and housing bubbles with a loud bang and sizable declines, does not seem to scare anybody in the context of the ongoing revelry.

How can one stay sober in a time of increased expectations when the best is yet to come?

The plot thickens

Most recently, various experts have started outdoing one another in predicting new highs for the markets. One of the first augurs to point to heaven was Asoka Woehrmann, Co-CIO of Deutsche Bank’s asset & wealth management, predicting the DAX would reach 9,200 by year’s end. Adding to that he proclaimed that, “while I had been skeptical all the time before, this time I know it’s for real!” Sounds a bit like, “this time it’s different,” does it not?! Then, revered professor of finance, Jeremy Siegel, sees a continuation of the uptrend and the Dow hitting 17,000 for 2013. And, to top it all off — surprise, surprise — renowned and at times prescient, Nouriel Roubini aka Dr. Doom, has miraculously turned into a Dr. Boom forecasting the markets to continue their ascent. Not only has the professor cum turncoat become a market bull, now he even confirms a time corridor of precisely two years of perfect bliss before a serious downturn ensues.

This actually means that you will be able to put your money in stocks, your mind at ease and enjoy watching them increase your net worth. It really does not get better than that! Somehow this is reminiscent of many a Chinese retail investor’s stern belief during the 2007 bull market that the Chinese stock market cannot and will not go down, simply because “the government and the party said so.”

There you have it: a banker (an expert at investing OPM, i.e. Other People’s Money, not his own) and two brilliant economists (theoretically and conceptually that is), reassuring the gullible investing public that the very best is yet to come.

Have you ever been wondering why these experts could never be bothered to monetize their sagacity and wisdom about the markets in practice? Why is it that, instead of entertaining the media and followers, they do not simply start their own hedge funds to rake in gazillions in the process? Whenever you get overall consensus is when it gets dangerous, really dangerous. New record highs continuously perpetuating emotional hype & euphoria force rational analysis and sober decision making to take a back seat. Before waiting for the tide to recede and see who is naked, let’s be preemptive by looking at:

Select stocks with serious bubble symptoms

Whirlpool Corporation (NYSE:WHR) is a leading home appliance & tool company that has won the title of most admired company in the home furnishing and equipment category as per FORTUNE’s 2013 ranking. It just got an upgrade to “Hold” from “Sell” by S&P Capital IQ. Just how you can “Hold” something after you have “Sold“ it, well, is again another story…

Saia Inc (NASDAQ:SAIA) is a company that provides trucking and logistic services across the United States. It has just declared a 3-for-2 stock split in order to make its stock more affordable to the investing public.

Snap-on Incorporated (NYSE:SNA) is an appliance & tool company, a manufacturer and marketer of diagnostic equipment, repair information and solution systems for professional users.

What do these companies share in common, apart from being cyclicals that move in tandem with an expanding and contracting economy?

They all are trading around all-time, multi decades’ historical highs, outperforming the S&P by a super large margin during the last 12 months.

WHR  + 108.3%

SAIA  + 143.0%

SNA   +   56.4%

S&P   +   26.9%

While this is not too surprising given the general, broad upsurge of the markets, it is very interesting to search for the exact reasons behind these mighty outperformances.

Top line development

Company REV2008 REV2012 VARabs VARrel REVQ1-12 REVQ1-13 VARabs VARrel
Whirpool 18,907 18,143 -1,764 -  4.1% 4,348 4,248 -100 - 2.3%
Saia 1,030 1,099 + 69 + 6.6% 269 274 +   3 +1.8%
Snap 2,853 2,938 + 85 + 2.9% 735 742 +   7 +0.9%

Unit: $million

Share appreciation

Company PRICE2008 PRICE2012 VARabs VARrel PRICEQ1-12 PRICEQ1-13 VARabs VARrel
Whirpool $ 81.6 $101.8 +$20.2 + 24.7% $76.8 $118.0 +$41.2 +  54.0%
Saia $ 12.0 $  23.0 +$11.0 + 92.0% $17.1 $ 34.8 +$17.7 +104.0%
Snap $ 39.4 $  79.9 +$39.6 +100.5% $61.0 $ 82.7 +$21.7 +  35.5%

The YTD 05/13 prices attained even higher record highs at $128, $47.8 and $91 respectively.

Fundamental growth and share prices grossly out of sync

As is very obvious, there is a huge discrepancy between real top line growth rates and share price appreciation. During the past, long four and a half years, these companies produced negative or dismal growth at best. The latest quarterly numbers show even lower growth rates. Let me rub it in: These companies have basically grown by zero, zilch, nada, null, ноль, 零! Yet, at the same time, their shares increased in value by double, even triple digits. During the last business year this huge gap continued to widen even further!

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!