Not even the best businesses can make money hand over fist every year. But the really good ones figure out a way to make a profit -- and to take care of their shareholders -- even during challenging times. In Louisiana, Pool Corp. (POOL 0.09%) is one of those. It's keeping the money flowing.
Pool Corp. isn't a flashy stock, but it has a great mix of consistency, cash flow, and good management. It's a favored stock of many income investors, including the Oracle of Omaha himself, Warren Buffett.
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What is Pool Corp.?
Based in Covington, Louisiana, Pool Corp. is an independent distributor of swimming pool products, supplies, parts, and outdoor equipment. The stock has had a challenging year. It's down nearly 14% this year in comparison to the S&P 500 consumer discretionary sector, which is up 3% on the year.
Part of the problem for Pool Corp. this year has nothing to do with the company, however. It's a reflection of the weak housing market and inflated interest rates for much of the year that's made borrowing unattractive for many. An in-ground swimming pool costs tens of thousands of dollars to install.
"The macro uncertainty and constantly developing policy decisions combined with no signs of interest rate easing continued to pressure new pool construction and larger renovation projects," CEO Peter Arvan told analysts.
Despite that, Pool Corp. is still bringing in a solid profit. It has more than 200,000 products and over 2,200 suppliers in the United States, Europe, and Australia. More than 80% of its customers are builders or service professionals, and 64% of its business comes from maintenance and repair product sales. Only 14% of its business comes from the installation of new swimming pools.
Pool Corp. also operates a fast-growing digital commerce and water testing platform, Pool 360, that's used by both professional and retail customers. The Pool 360 platform accounts for 17% of the company's net sales, up from 14.5% a year ago.
That's why, despite the down market, Pool Corp. managed to increase revenue in the second quarter by 1% over last year, to $1.78 billion. The company's gross profit of $535.1 million was up slightly from the previous year, and it managed to maintain its 30% profit margin. Net income was $194.2 million, up slightly from the previous year, and diluted earnings were $5.17 per share, versus $4.99 per share in Q2 2024.
The bottom line? Pool Corp. prints money, even when the economy turns against it.
Looking ahead for Pool Corp.
Undoubtedly, things are looking up for borrowers and would-be homeowners. Interest rates are finally starting to fall, and Fed Chair Jerome Powell has indicated that more rate cuts are forthcoming. Homebuilders are looking at improved conditions for 2026, and Pool Corp. believes that pool construction projects will increase, as well.
"With the demographic trends, desirability of at-home leisure, and continued need for maintenance and renovations supporting ongoing demand, we believe that when the macro backdrop improves and the housing turnover resumes, new pool construction and renovation activity will accelerate, and Pool Corp will be uniquely positioned to capitalize on that growth," Arvan said.
The company expects to see "modestly" improved sales in the third and fourth quarters, and full-year performance to be flat for the year. Earnings are expected to be in a range from $10.80 per share to $11.30 per share for the full year, versus $11.30 per share in 2024.
Even with that, however, Pool Corp. is paying a strong dividend of $5 per share, for a dividend yield of 1.73%. It's increased the dividend in each of the last 15 years -- giving income investors a reason to hold Pool Corp. stock even when market conditions are poor.
The bottom line
I'm a big fan of Warren Buffett, the longtime CEO of Berkshire Hathaway. So, it's meaningful to me that Berkshire Hathaway is a major investor in Pool Corp., holding 3.45 million shares of stock for a 9.3% stake in the company.
Buffett is famous for investing in companies that are sound, provide a solid income stream, have reasonable margins, and take care of their investors. Pool Corp. checks all those boxes.
It's not flashy. It's not dynamic. But it's the go-to company for the pool industry -- and that's something that's not likely to change. That's why this Louisiana company is a great opportunity for long-term investors to buy low and hold on for growth.
