Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on Pool Corporation (POOL) on Compounding Quality’s Substack. In this article, we will summarize the bulls’ thesis on POOL. Pool Corporation (POOL)'s share was trading at $305.35 as of 3rd June. POOL’s trailing and forward P/E were 28.59 and 27.78 respectively according to Yahoo Finance.
Pool Corporation is a quiet yet powerful market outperformer, generating revenue primarily through the distribution of pool supplies, equipment, and outdoor living products to contractors and retailers. The bulk of its income comes from the sale of recurring maintenance and repair items, while a smaller portion stems from products used in new pool construction and renovations. Its business model thrives on the essential and repeat nature of pool maintenance, which provides a stable revenue base irrespective of housing cycles or macro volatility.
Over the years, Pool Corporation has developed a reputation as a silent compounder—consistently outperforming the broader market—thanks to its strong fundamentals, including a robust balance sheet, high profitability, and disciplined capital allocation. These qualities have kept the company on the radar of long-term investors, and recent share price movements have made the stock more attractive once again.
According to a proprietary earnings growth model, Pool Corporation is expected to deliver a solid 9.0% annual return, which is compelling given the company’s track record and quality. Furthermore, the gradual compression of its Forward P/E ratio suggests the stock may now be entering a more reasonable valuation zone, increasing its appeal for value-conscious investors.
Notably, Berkshire Hathaway recently took a position in Pool Corporation, acquiring nearly 900,000 shares last quarter, adding further credibility to the investment case. This move signals confidence from one of the world’s most respected investors, reinforcing the view that Pool Corporation offers a rare combination of stability, profitability, and long-term compounding potential.
Previously we had covered Pool Corporation (POOL) in a bullish thesis written by Douglas Ott. On Substack in December 2024. Since then the stock has depreciated by approximately 18% in value however both the covered theses still stand. Douglas’s thesis builds the macro/micro foundation, while Thesis 2 reframes POOL as a long term compounding security, it’s about trusting the business's consistency, financial rigor, and value re-rating, with bonus validation via Berkshire’s endorsement.
Pool Corporation (POOL) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held POOL at the end of the first quarter which was 32 in the previous quarter. While we acknowledge the potential of POOL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.
