An analyst note from JPMorgan sends shares of Whirlpool (NYSE:WHR) higher. In this episode of MarketFoolery, Motley Fool analyst Alicia Alfiere digs into the rise of home improvement stocks and talks about why Whirlpool fits the trend. Plus: How to think about whether it's time to sell your shares of Uber (NYSE:UBER)

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This video was recorded on July 7, 2021.

Chris Hill: It's Wednesday, July 7th. Welcome to MarketFoolery. I'm Chris Hill, with me today, Alicia Alfiere. Thanks for being here.

Alicia Alfiere: So glad to be here.

Hill: We're going to talk Uber. We've got a pretty awesome consumer goods story we're going to discuss, but we're going to start today with Whirlpool, because shares of Whirlpool are up 3% after JPMorgan put out a note to their clients saying, this is one of our top picks. I'm a little surprised they used the word hated because in their note said that Whirlpool was a hated stock on Wall Street but prime to beat expectations in the quarters ahead. I'm a little surprised that it's a hated stock in part because you go back to January 2020, the stock is up 50%. This seems to track, Alicia, with something we've talked about on the show before, which is the investments that people are making in their homes.

Alfiere: Yes. First, let's say this increase is not without merit. Whirlpool, for their last quarter, saw a revenue growth of 24% year-over-year, which was driven by consumer demand and some pricing actions that they took due to inflation and some supply constraints. Why do we have this increased demand for dishwashers, refrigerators, and other domestic appliances? Well, part of it is because of the increase in home sales, but also due to renovations, according to the 2021 U.S. Houzz & Home study, Renovation Trends, which is put together by Renovation and Design Platform House. That's H-O-U-Z-Z.

Hill: Of course it is. (NYSE:RH)

Alfiere: I think it's more "houzz." Spending on home renovation projects has grown 15% over last year with a median project spend of about $15,000. Kitchens were the most popular target of renovation projects which really fit in with the whole Whirlpool trend. The ticket price for major remodels of a large kitchen jumped 14% to total $40,000 in 2020. Maybe everyone's watching a little too much HGTV. Maybe they're getting their house ready for sale, or investing in their home. Maybe products are breaking because we're home so much or people are just investing in their house. It's a trend that's benefiting more than just Whirlpool. We saw Restoration Hardware had a strong quarter with revenue growth of 78% year-over-year and Sherwin-Williams too. Net sales in the first quarter increased over 12%. Big growth here.

Hill: It's going to be interesting to see if Whirlpool can sustain the run that it's been on because as I said, I know a lot of people like to go back just a year but given the how many stocks bottomed out in April of 2020. Whenever possible, I like to go back to January. You go back to January 2020, again, the stocks are up about 50%. But prior to that, it's basically flat for several years. There's a little bit of up and down movement. It'll be interesting to see if they can capitalize on this because this is a quality brand. There's absolutely equity there. As you said, all the trends that we're seeing with home improvements, home upgrades, it seems like just from an appliance standpoint, off the top of my head, Whirlpool and Samsung would be two of the likeliest candidates to benefit.

Alfiere: Agreed. Like you said, we'll see if they can continue with this trend. I think people are always going to need dishwashers, washing machines, that sort of thing.

Hill: Our email address is MarketFoolery@fool.com. Coming out from Aaron in Chicago, he writes, "Uber is up 55% since I bought it but I'm hearing from drivers who are unhappy with the culture of the business and there are rumors that the business plan was to offset costs of under bidding the competition for rides, drive others out of business, and then raise their prices." That tracks with what I've always thought about Uber. He goes on to say, "I'll add that in the last two months, I've personally experienced price prohibitive rides in three different cities and felt the need to find an alternative. Is it time to sell or is there a plan for change that I'm missing? Thanks for any insights, love the podcast." Thank you for that, Aaron. It's interesting because Uber is one of those businesses I find incredibly fascinating to watch and I have zero interest in owning. I just don't see the payoff that others see. But Aaron's sitting on a 55% gain, obviously we can't give individual advice, Alicia, but what do you think?

Alfiere: First, congratulations on being up 55%. That's pretty great. But for selling, it is a personal decision, an individual choice that every investor makes for themselves based on risk. What kind of risk you're willing to deal with, what kind of risk you think is too much, as well as your investment thesis. For me, whenever I think about selling, I take a look at my original investment thesis and I actually journal about it to see if anything changed. I thought maybe we could unpack and journal out loud if that's OK with you?

Hill: Absolutely.

Alfiere: Awesome. If you went into your investment of Uber thinking it's a disruptive force within transportation, disrupting the old method of cabs, or potentially even owning a car, that could still be the case. But to your point, substantially increasing fares, that could impact the thesis. Especially if you were thinking that Uber is a more affordable or a cheaper alternative to the traditional cab ride. But it depends on how much of an increase this is and also how easy it is to hail a cab versus an Uber. I think that's something to look at. Also, these fare hikes look to be driven at least in part by labor shortages. Your concerns about how they treat their workers are something that a lot of people have had questions about. For the fare increases that have happened, that extra money isn't necessarily going to the people that are driving for Uber since the drivers are paid based on fare, plus an amount for time and distance, then they get a little bit in terms of bonuses for search pricing. Something to look at there. Also, think about, are they flexible? Are they innovative? Uber got into the food delivery service and it really helps their revenue so that's a positive. They also announced a partnership with an electric vehicle maker, to build affordable EVs for ride-hailing drivers. That could be positive too. Are they profitable? In Uber's case? No. But are they building toward profitability? Are they streamlining their business? I think Uber recently sold off their autonomous vehicle division and their flying car division. That could be good for streamlining costs. But if that was something that you really loved for innovation, that could be a problem for you. Are there bright spots ahead? The economy is reopening. People are going to be going back to their offices. But at the same time, Uber is going to need drivers to be able to take people places. Is it a risk? Will they be able to hire, attract and retain drivers? These are all things that I would think about and journal about, definitely, before deciding if selling is right for you.

Hill: I'll just add a couple more things. One is, obviously, you want to think about taxes because you are in the fortunate position of having to pay capital gains taxes. It's just a question of how long have you owned the stock and are you paying those short-term capital gains? Or if you've owned it more than a year obviously, that's a much lower rate. Then the other thing is, what are you going to do with the money? Because if these are your investment dollars and you're thinking, I've made a 55% gain and I think over the next one, three, five years, I can do better putting my money somewhere else, then that goes on the list of reasons to sell. But I think the things you touched on Alicia, that's part of why I find it such a fascinating company because I think we're years away from knowing what Uber is going to end up being. It's entirely possible that 10 years from now, we look back and say, we should've known all along that they were going to be this hugely successful, wildly profitable company. But in the moment, sometimes it's really tough to see.

Alfiere: That's part of the analysis too. What do you think the future will hold for them? Where do you think they'll go?

Hill: God, this is such a hopeful story. It makes me so happy. The Canadian division of Heinz Ketchup has started a petition urging the manufacturers of hotdogs and the manufacturers of hot dog buns to get together. If you've ever gone shopping for hot dogs and hot dog buns, you know what I mean when I say get together. Get together and work it out because hotdogs come in a package of 10 and hotdog buns come in a package of eight. It's time to just work this out and I get why the bun manufacturers are like, no, we're not doing this. Not only is there no financial upside in this for us, there's a disincentive for us. We sell more but you need to buy two packages of buns. If you end up sticking a couple in the freezer and they sit there for a few years and then they have freezer burn, guess what? You have to go out and buy new buns and that's good for our business. But come on. I love this story and I think it's appropriate that it's a condiment company that is the one saying, hey, we're going to be Switzerland. We're going to bring these two to the table and see if we can work out a piece.

Alfiere: Agreed. Heinz, the condiment maker and a hopeful intermediary between hot dog makers and bun makers. I'm hopeful that we'll see Heinz bring harmony to picnics everywhere. I'm not sure it's going to happen as you said. It's within the bun makers' best interest to not hope onboard this collaboration train. But I'd really like to see them do it. The negative point of this, how many comedic bits do you think there have been over this issue?

Hill: Too many.

Alfiere: I think there is a scene in Father of the Bride, where he just opens up another package of buns to get the appropriate number.

Hill: I think if Heinz is serious about this, because there's obviously a level of humor here, which I appreciate. But there is a way for Heinz to maybe not just try and broker a piece but become part of the solution. Kraft Heinz (NASDAQ:KHC) is a $50 billion company. Couldn't they come to the table with some money and just create a marketing campaign where they get together with a hot dog manufacturer and a bun maker, and they become the official hot dog and bun of Kraft Heinz. They come out with new packaging, there's a seal of approval, there's some money in it, particularly for the bun makers. When I saw this story this morning, the first person I thought of was Tim Hanson, former long time Fool because it was on this podcast years ago. When I say years ago, it might have been 2012. It might have been close to a decade ago that Tim was the first person I ever heard bring this up. I was just like, oh my God, I hadn't even thought of that before and he was like, this is ridiculous. They need to figure this out. With the help of Kraft Heinz, do we dare to hope this is going to happen?

Alfiere: I think we do. Let's bring harmony to buns and hotdogs.

Hill: You know what? I like it. Let's end on the side of optimism, just in this one situation because what is investing, if not an exercise in optimism for the future?

Alfiere: Absolutely.

Hill: Alicia Alfiere, great talking to you. Thanks for being here.

Alfiere: So great to be here.

Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of MarketFoolery. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.