Should Investors Lock Arms With Buffett and Dive Into POOL Stock?

Core Viewpoint - Warren Buffett's investment in Pool Corporation (POOL) suggests confidence in the long-term potential of the swimming pool industry despite current market challenges [1][2][3] Investment History - Berkshire Hathaway initiated a position in Pool in Q3 2024 with approximately 404,000 shares at an average price of $342 [3] - The investment was increased significantly in Q1 2025, with Berkshire holding 1,464,000 shares, a 145% increase from the previous quarter [5] - As of July 28, Pool shares traded at $321, indicating that the investment opportunity identified by Berkshire remains available [5][6] Financial Performance - Pool's Q2 sales were reported at $1.78 billion, reflecting a growth rate of just under 1% [6] - Adjusted earnings per share (EPS) for Q2 came in at $5.17, exceeding expectations of 2.8% growth with an actual growth rate of approximately 3.8% [6][7] - The company adjusted its full-year EPS guidance down by 2.2% to $11.05, indicating challenges in demand management [7][8] Market Conditions - The pool construction market is currently experiencing a downturn, with expectations for no rebound in 2025 due to high interest rates affecting housing turnover [8][9] - New pool construction accounts for only about 15% of Pool's sales, but it is essential for long-term growth as it expands the customer base for maintenance products [10][11] Long-Term Trends - Scientists predict a significant increase in average global temperatures by 2100, which may drive a long-term trend toward increased swimming pool ownership [9][13] - Population migration to warmer Southern U.S. states is identified as a long-term growth driver for the company [11] - Analysts see limited short-term upside for Pool shares, but there is potential for significant appreciation over the long term if favorable trends materialize [13]