Pool Corporation (POOL): A Bull Case Theory

We came across a bullish thesis on Pool Corporation on Libertalia Investing’s Substack. In this article, we will summarize the bulls’ thesis on POOL. Pool Corporation's share was trading at $254.09 as of January 30th. POOL’s trailing and forward P/E were 23.28 and 21.79 respectively according to Yahoo Finance.

Pool Corporation distributes swimming pool supplies, equipment, related leisure, irrigation, and landscape maintenance products in the United States and internationally. POOL remains a compelling long-term investment despite recent slowdowns tied to the housing market, reflecting the cyclical nature of its growth.

Nearly two years after the initial analysis, the company has demonstrated resilience, with revenue showing its first increase in nine quarters and posting two consecutive quarters of positive growth. Normalizing for the COVID-related surge, POOL continues to exhibit higher revenue and improved profit margins relative to pre-pandemic levels, suggesting a return to sustainable growth rather than structural decline.

The company’s balance sheet further supports its durability, with long-term debt remaining below 3x free cash flow, positioning POOL well to capitalize on any market rebound. Looking ahead, potential housing policy reforms aimed at improving affordability—such as lower interest rates, portable mortgages, or even 50-year mortgage options—could provide additional tailwinds for the business, although the precise impact remains uncertain. From a valuation standpoint, assuming a return to normalized performance, POOL is trading near a 10% capitalization rate, not yet reflecting the company’s historical ability to deliver sustained growth.

This combination of resilient operations, a strong balance sheet, and potential macroeconomic support underscores POOL’s attractiveness for patient investors. While short-term performance has been muted, the long-term trajectory remains intact, and the company’s fundamentals suggest that investors who maintain their positions are likely to be rewarded as market conditions and housing demand improve. For those holding at earlier cost bases, the current environment represents an opportunity to remain invested in a well-managed, cash-generative serial compounder with significant upside potential over the coming years.

Previously, we covered a bullish thesis on Pool Corporation (POOL) by Douglas Ott in January 2024, which highlighted the company’s resilience through non-discretionary pool maintenance revenues, pricing power, and strong distribution scale despite COVID-era pull-forward effects. POOL’s stock price has depreciated by approximately 12.78% as of May 2025 due to continued revenue normalization and regional headwinds. Douglas Ott shares an identical perspective but emphasizes the ongoing complexity of market recovery and gradual return to historical growth trends.

Pool Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held POOL at the end of the third quarter which was 44 in the previous quarter. While we acknowledge the potential of POOL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.