10 Best Industrial Distribution Stocks to Buy Now

05. Pool Corporation (NASDAQ:POOL)

Number of Hedge Fund Holders: 37

Pool Corporation (NASDAQ:POOL) is a leader in the industrial distribution sector, particularly for pool supplies and equipment. Its extensive distribution network supports pool builders, remodelers, specialty retailers, and service businesses in the U.S. and internationally. The company offers a broad range of maintenance products, construction materials, and pool equipment, making it a top contender in the industrial distribution space. Hedge fund interest in Pool Corporation (NASDAQ:POOL) has slightly dipped, with 37 hedge funds holding the stock as of Q2 2024, down from 40 in the previous quarter.

For Q2 2024, Pool Corporation (NASDAQ:POOL) delivered strong financial results, beating earnings expectations with an EPS of $5.02, surpassing the anticipated $4.90. Net sales reached $1.8 billion, showing resilience in the face of economic headwinds that affected discretionary spending on new pool construction and large renovation projects. However, nondiscretionary demand for maintenance-related products remained solid, helping to stabilize the company’s revenue.

Gross margins for Q2 were 30%, down 60 basis points compared to the previous year, reflecting the company’s ability to manage margins even with the pressure from lower discretionary sales and higher commodity costs. Operating income stood at $271.5 million, representing an operating margin of 15.3%. Although this is a decrease from the 17.6% margin in the same quarter last year, it highlights Pool Corporation (NASDAQ:POOL) continued investment in technology, digital platforms, and strategic growth initiatives.

The company’s POOL360 digital platform, which facilitates customer transactions, saw increased adoption, with 14.5% of total sales processed through the platform, up from 11% in Q1. This digital expansion demonstrates Pool Corporation (NASDAQ:POOL) focus on enhancing customer convenience and improving operational efficiency.

Pool Corporation (NASDAQ:POOL) strong cash flow allowed for $173 million to be returned to shareholders through dividends and share repurchases in 2024. Additionally, the company’s dividend increased by 9%, marking the 14th consecutive year of growth. Despite challenging market conditions, Pool Corporation (NASDAQ:POOL) long-term fundamentals remain strong, supported by its robust distribution network, innovative digital tools, and a growing installed base of pools requiring maintenance.

Parnassus Mid Cap Fund stated the following regarding Pool Corporation (NASDAQ:POOL) in its Q2 2024 investor letter:

“Pool Corporation (NASDAQ:POOL), a swimming pool supply distributor, lowered its full-year earnings estimates as demand for new pool construction fell more than expected due to high interest rates impacting big ticket purchases. Most of its revenue comes from maintenance of installed pools, which should be resilient.”