While stocks are still near all-time highs, many sectors of the market have lagged. Part of that is simply the excitement in the tech space. Another part is that many non-tech companies have high production costs and lower profit margins.
Several of these companies now trade at a compelling discount to the overall stock market. And many also pay generous dividends, reflecting the power of their brands and the moderate growth opportunities ahead.
For instance, Whirlpool Corporation (WHR) have sunk 22 percent over the past year, a reverse trade compared to the S&P 500.
However, that drop has pushed the company down to 13 times earnings, and the dividend to 6.3 percent.
Plus, while demand for appliances may not be a major growth trend like AI, it’s still a steady business. That should keep the dividend steady, and allow the company to pay down debt.
Between population growth and the need for replacements, Whirlpool will likely remain a steady business. That could lead shares higher over time.
Action to take: Long-term investors may like shares near current prices. The steady dividend should look increasingly attractive later in the year when interest rates finally decline. That could also lead to low-to-mid double-digit returns on the share price.
For traders, the June 2024 $120 calls, last trading for about $3.20, could see mid-to-high double-digit returns in the coming months as shares trend higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.