Warren Buffett buys Pool Corp stock, aligning with analysts' price target increase

From Nasdaq: 2024-11-20 08:30:00

Warren Buffett recently purchased stocks in Domino’s Pizza Inc. and Pool Corp. Both purchases were significant, despite making up a small part of Berkshire Hathaway’s portfolio. Pool Corp is the leading distributor of swimming pool equipment, with business segments in new pool construction and maintenance equipment for pool owners.

Housing starts fell 6.9% in November, affecting Pool Corp’s key market in Florida. However, housing permits only increased by 0.5%, indicating higher mortgage rates. Pool Corp is in the consumer discretionary sector and experienced growth in 2020 and 2021 due to increased home improvement efforts during the pandemic.

POOLCORP reported a solid third-quarter earnings report with EPS of $3.26, beating expectations. Despite a 3% decline in net sales due to storms in Florida, sales grew in Arizona and Florida. The company isn’t forecasting significant sales improvement for the current quarter, but it remains attractive for investors.

POOLCORP’s balance sheet shows reasons why Buffett may be interested, including reduced debt, strong cash flow, share buybacks, and consistent dividend growth. The stock is currently trading within a range above $350, with a consensus price target around that level. Analysts, including Goldman Sachs, have raised price targets for POOL stock.

Buffett’s purchase of POOL stock aligns with Goldman Sachs’ price target increase. While not a traditional Buffett buy-and-hold stock, POOLCORP may exceed sales expectations, making it a potential short-term trade opportunity. Consider the company’s financial health, growth potential, and analyst recommendations before investing.



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