The Warren Buffett Stock That Soared 42,000%—Is Now the Right Time to Dive In?

In the ever-churning waters of the stock market, few returns rival the staggering 42,000% surge of Pool Corporation (POOL) since its IPO. This meteoric rise has placed the swimming pool supplies giant squarely in the spotlight, especially after Warren Buffett’s Berkshire Hathaway bought a stake in late 2024. But with interest rates high and consumer spending tepid, is this the ideal moment to jump into Pool’s stock? Let’s dive deeper.

A Recession-Proof Model Built on Splashy Revenues

Pool Corporation isn’t just a distributor of pool supplies—it’s a master of recurring revenue. By focusing on the maintenance and supplies segment, which now accounts for 65% of sales, Pool Corp. has engineered a business that thrives regardless of economic cycles. Every pool built is a lifelong customer for filters, chemicals, and parts. This model is akin to a subscription service, but with pools instead of Netflix.

The company’s strategy of acquiring smaller competitors has further solidified its market power. Over the past decade, Pool Corp. has consolidated fragmented regional markets, reducing competition and boosting pricing power. Meanwhile, its free cash flow—generated at a rate of $1.3 billion over the last five years—fuels buybacks and dividends.

A Buffett Stamp of Approval

Warren Buffett’s Berkshire Hathaway rarely wades into niche industries, but Pool Corp. checks all his boxes: durable competitive advantages, predictable cash flows, and management that reinvests wisely. The Oracle of Omaha’s $500 million stake in 2024 sent a clear signal: this isn’t just a pool company—it’s a cash-generating machine.

Navigating Headwinds: Can the Party Continue?

Despite its strengths, Pool Corp. isn’t immune to macroeconomic headwinds. Rising interest rates have crimped new pool installations, a segment that contributed just 15% of 2024 revenue. Meanwhile, the lingering effects of the 2022 pandemic boom—when earnings spiked to $18.43 per share—have left some investors wary of a slowdown.

Yet management remains confident. In 2025, Pool Corp. reaffirmed its earnings guidance of $11.10 to $11.60 per share, a slight increase from 2024’s $11.07. This stability stems from its recession-resistant maintenance business, which has grown steadily even as new installations wane.

Valuation: A Discounted Gem or Overvalued?

Pool Corp.’s valuation offers a compelling entry point. Its dividend yield of 1.6%—its highest in over a decade—is a sign of financial confidence. With a payout ratio below 50% of projected 2025 earnings, the dividend appears sustainable even if earnings flatten.

Analysts at institutions like Goldman Sachs and JPMorgan rate the stock a “buy,” citing its fortress balance sheet and the likelihood of economic recovery boosting demand for new pools.

Conclusion: A Long-Term Dive Worth Taking

Pool Corporation’s 42,000% return since its IPO isn’t a fluke—it’s the result of a strategic business model that turns pools into cash flow machines. While near-term volatility is inevitable, the company’s recurring revenue streams, strong balance sheet, and Buffett’s endorsement make it a rare gem in today’s market.

Investors should note: Pool Corp. isn’t a get-rich-quick play. It’s a buy-and-hold candidate for those willing to ride out economic cycles. With a dividend yield at decade-highs and a valuation that reflects current challenges rather than long-term potential, now could be the perfect time to dive in—before the next wave of pool construction picks up steam.

After all, as Buffett might say: “Be fearful when others are greedy, and greedy when others are fearful.” In Pool Corp.’s case, fear is fading—and the water’s warm.