Even thou I think Whirlpool has a better appliance business, doesn’t mean there isn’t potential at General Electric. General Electric looks to be in the top three in any of its businesses. Looking forward, General Electric has a great collection of businesses in its portfolio with plenty of room for growth. For example, General Electric has a rapidly-growing healthcare business and has invested $2 billion to accelerate its software development. This will increase productivity and drive margins and profits for its healthcare division.
Another segment with tremendous growth prospects for General Electric is its aircraft engine business. The company delivered 3,300 engines last year, and the figure for this year is forecast to be between 3,600 to 3,800 engines. These are big-ticket items and that’s tremendous growth. In the U.S. alone, most airlines need to buy new airplanes to upgrade their fleets. In Asia, airlines need new planes to keep up with population growth and increased air travel. All of this bodes well for General Electric aircraft engines.
Kenmore
The problem for Kenmore is that it’s part of Sears. There haven’t been many positives one can say about Sears Holdings Corp (NASDAQ:SHLD) over the many years. In many ways, you can say that the company is extremely undervalued. You might also say that the stock is a value trap and that the company is in more trouble than it appears.
For Sears to get going again, I think the company needs to embrace its Kenmore appliance division. Kenmore appliances, along with Craftsmen tools and equipment, are two of the most popular and enduring brands in the world. I can remember growing up with both Kenmore appliances and Craftsmen tools in my house. Sears still has a great name overseas, and if the company can leverage that with its Kenmore and Craftsmen brands then it would be a formidable competitor to a company like Whirlpool Corporation (NYSE:WHR).
This is highly unlikely, though, as CEO Eddie Lampert is more concerned with unlocking value and not growth. His focus is on the company’s undervalued real estate assets and not in growing the company and its brands. I think this is a mistake and explains why the stock is down almost 10% in the past year.
Foolish assessment
I like the consumer appliance business and see opportunities for growth as housing recovers. As incomes rise in developing markets, demand is there as well for home appliances. Whirlpool Corporation (NYSE:WHR) is a pure play on the home appliance business and offers continued upside with its business model.
The article Whirlpool Is Your Best Bet in Consumer Appliances originally appeared on Fool.com and is written by Mark Yagalla.
Mark Yagalla has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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