The stock market does not have to be complicated. There are some very basic investment components that work together to increase stock prices: profitability, low valuations, and bullish charts.

Investors search far and wide for such stocks, scouring the Internet and following prominent investment gurus, hoping to discover unknown gems — but what if I told you that one such undervalued aggressive growth stock has been right under your nose — in your kitchen?

Whirlpool Corp. (NYSE: WHR), the world’s largest home appliance manufacturer, has been increasing earnings at a pace that would make most companies blush. Net income more than doubled last year, to a record $827 million on revenue of $18.8 billion, propelled by global expansion, the U.S. housing recovery, cost-cutting efforts, and disciplined product pricing.

Whirlpool makes all your standard large appliances — washers, dryers, refrigerators, freezers and dishwashers — as well as smaller kitchen appliances. Some of the many brands it produces include Whirlpool, Kenmore, Maytag and KitchenAid. 

In 2012, the U.S. market accounted for 52% of Whirlpool’s sales. U.S. appliance sales are increasing in conjunction with rising housing starts and home prices, and increased home renovation activity.

European sales are expected to increase slowly, in step with a gradual economic recovery. The company’s fastest-growing region is Latin America, which now accounts for 27% of sales.

Whirlpool spends $500 million a year on research and development. The company is focused on product innovation and enhancements designed to increase reliability and energy efficiency. The company has received more Energy Star awards than any other manufacturer.

	Flickr/Spotrebice Whirlpool
	Whirlpool has been increasing earnings at a pace that would make most companies blush, thanks to global expansion, the U.S. housing recovery, cost-cutting efforts, and disciplined product pricing.

Whirlpool reported first quarter results on April 25, with net sales up 4.7% to $4.4 billion. Earnings per share (EPS) came in at $2.20 per share versus $1.97 a year ago, excluding a tax credit and restructuring costs. The company confirmed its outlook for full-year 2014 EPS of $12-$12.50. North America sales are expected to increase up to 7% this year, and its Latin American region will be weakest, lacking any sales growth.

Whirlpool’s EPS doubled in 2013, reaching $10.24, and are expected to grow an additional 22% and 16% in 2014 and 2015, respectively.    

Whirlpool had $1.4 billion cash on hand at the close of 2013, much of which is being used to enhance shareholder value. The company increased its quarterly dividend in mid-April to $0.75 per share, giving the stock a current yield of 2%.  

Whirlpool also recently announced a new $500 million share repurchase authorization. The previous repurchase plan was completed in December.

The long-term debt-to-capitalization ratio has been decreasing for five years, and now stands at 24.7%.

To give you an idea of how undervalued Whirlpool shares are today, its earnings are growing faster than those of Home Depot (NYSE: HD), The Walt Disney Co. (NYSE: DIS), Expedia (Nasdaq: EXPE) and CBS Corp. (NYSE: CBS). And those stocks all have significantly higher price-to-earnings (P/E) ratios than Whirlpool’s forward P/E of 10.8.

Wall Street knows that Whirlpool is undervalued, which is why institutions own 93% of the shares.  

Even though there’s plenty of room for P/E expansion, let’s assume that the P/E only reaches 15 this year, a level it’s hit in each of the past eight years. Given Wall Street’s consensus 2014 EPS estimate of $12.30, that would give WHR a 2014 target price of $184.50. That’s an increase of 19.5% over the current price.

Whirlpool shares broke past long-term price resistance in March 2013, rose about 40%, then corrected with the broader market in late January 2014.  

I gave my first buy recommendation on WHR on March 3, 2013, adding that the stock “appears immediately ready to break out of a trading pattern and begin reaching new highs.” The new highs began the very next day.

The stock is now rebounding toward its January high of $160, at which point I expect a short-term pullback to about $152.

Risks to Consider: With a beta of 1.8, WHR is more volatile than the broader market. Industry rivalry could lead to price competition, and the expected economic recoveries in the U.S. and Europe could fail to materialize. Finally, rising interest rates could weigh on consumer spending.  

Action to Take –> This stock is a tremendous value, and could appeal to aggressive growth investors and income investors. My suggestion is to accumulate WHR shares between now and the ex-dividend date of May 14, in preparation for a near-term breakout past $160.

P.S. Whirlpool’s drive to reduce debt and reward its shareholders make it an ideal pick for our Total Yield investing strategy. We’re so excited about this new strategy that we’re devoting a newsletter to it and giving readers an exclusive glimpse at some of the top stocks we’ve uncovered with this method — including one that’s gained an astonishing 247% over the last year. To view our free research, just follow this link.