Can Pool Corp Still Deliver Lifelong Wealth to New Investors?

In the wake of Berkshire Hathaway's bold 144.5% increase in its stake in Pool Corporation (POOL), the market is abuzz with questions about the long-term viability of a business that thrives on a seemingly niche corner of the economy: swimming pools. Warren Buffett's recent $466 million investment in Pool Corp, a company best known for distributing pool chemicals and equipment, may seem counterintuitive in an era of AI-driven disruption and climate-conscious consumerism. Yet for investors seeking durable, recession-resistant cash flows, this move underscores a compelling case for Pool Corp's enduring value proposition.

The Recurring Revenue Moat: Why Pools Are Not a Luxury

Pool Corp's business model is anchored in a simple but powerful insight: maintaining a pool is not a discretionary expense—it's a necessity. Approximately 65% of the company's revenue comes from recurring sales of chemicals, filters, and other maintenance products. This creates a stable, predictable cash flow that insulates the business from the volatility of new pool construction, a segment that fluctuates with housing market cycles and interest rates.

Historical data reveals this resilience. During the 2025 Q1 soft patch, when new pool construction dipped due to high borrowing costs, maintenance sales still grew by 1%. Even as the broader economy faces headwinds, Pool Corp's core business remains robust. This is not a luxury-goods company; it's a utility for 10 million U.S. in-ground pools.

Buffett's Calculus: Margin of Safety in a “Normal” Market

Berkshire's timing is telling. At a trailing P/E of 27x—near its historical average—Pool Corp is neither a screaming bargain nor an overpriced fad. However, the company's 30% average return on equity and 27% dividend payout ratio (relative to earnings) offer a margin of safety that aligns with Buffett's philosophy of investing in high-quality businesses at reasonable prices.

The recent 15% stock price decline, driven by macroeconomic fears, has likely made this a more attractive entry point. Buffett's team appears to agree: the purchase of 1.44 million shares in Q1 2025 suggests confidence in Pool Corp's ability to navigate near-term challenges and capitalize on long-term tailwinds.

Macroeconomic Headwinds and Tailwinds

The U.S. housing market remains a mixed bag. While new pool construction has slowed—partly due to 6.5% mortgage rates—homeowners are increasingly prioritizing maintenance over replacement. The median home with a pool commands a 54% price premium in 2025, down from a pandemic-era high of 61%, but still well above pre-2020 levels. This sustained premium reflects pools' role as a “must-have” amenity in warm-weather markets like Phoenix and Austin, where 47% of listings now include pools.

For Pool Corp, this means a growing installed base of pools that require ongoing care. Even if new construction stalls, the 10 million existing pools in the U.S. represent a $659 million annual free cash flow engine. The company's 449 sales centers and POOL360 digital platform further cement its dominance in a fragmented industry, enabling same-day delivery and predictive maintenance services that deepen customer loyalty.

Innovation and Shareholder Returns: The “Betta” of the Future

Pool Corp is not resting on its laurels. The company's foray into tech-driven solutions—such as partnerships with robotic pool cleaners like the Betta SE Plus—signals a strategic pivot toward modernizing the maintenance experience. These devices, which use solar power and AI navigation, align with consumer trends toward automation and sustainability.

Meanwhile, Pool Corp's capital return programs remain aggressive. Over the past decade, the company has returned $4.3 billion to shareholders, with a $600 million buyback program authorized in 2025. At current prices, this could retire nearly 10% of its market cap, boosting earnings per share and enhancing long-term value.

Risks to Consider

No investment is without risk. Pool Corp's reliance on the U.S. housing market makes it vulnerable to prolonged interest rate hikes or a housing correction. Additionally, the maintenance segment, while resilient, faces competition from DIY retailers and private-label brands. However, the company's scale, brand strength, and digital infrastructure provide a durable competitive edge.

Final Verdict: A Recession-Proof Legacy?

For new investors, Pool Corp offers a rare combination of recession resilience, recurring revenue, and disciplined capital allocation. Berkshire's investment validates the company's long-term potential, particularly as it navigates macroeconomic normalization. While the stock may not offer the explosive growth of a tech unicorn, its 30% ROE, 20% dividend growth CAGR, and expanding market share make it a compelling candidate for a diversified portfolio.

In an era of economic uncertainty, the lesson from Buffett's latest move is clear: sometimes the most enduring wealth is built not in the spotlight of disruptive innovation, but in the steady hum of a business that meets a universal need. For Pool Corp, that need is as simple—and as timeless—as clean water.