Latham Group, Inc. (SWIM): A Bull Case Theory

We came across a bullish thesis on Latham Group, Inc. (SWIM) on Substack by Stock Analysis Compilation. In this article, we will summarize the bulls’ thesis on SWIM. Latham Group, Inc. (SWIM)’s share was trading at $6.48 as of Dec 4^th. SWIM’s trailing P/E was 64.80 according to Yahoo Finance.

Latham Group, the leading manufacturer of fiberglass pools in the U.S., is positioned for substantial growth, offering a compelling investment opportunity. Fiberglass pools have steadily gained market share, growing from 16% of new pool starts in 2019 to 22% today. This is driven by their lower maintenance costs, quicker installation, and superior design compared to concrete and vinyl pools. This trend is expected to continue, with fiberglass pool penetration projected to exceed 30% over the next decade, reflecting the patterns observed in other markets. Increased new pool starts, a higher share of fiberglass pools, and growing demand for ancillary products will fuel Latham’s growth. These factors are expected to result in a long-term revenue growth rate in the low double digits and 15–20% earnings per share growth driven by operating leverage.

Recently, the company faced challenges as the pool industry experienced a downturn, with new pool starts falling 50% due to rising interest rates. This resulted in a decline of over 50% in Latham’s EBITDA and a sharp drop in its share price from $30 to $2. However, Latham’s outlook is strong with the market expected to recover. Anticipated 2029 earnings of around $2 per share set a price target of $50, representing a potential 600% upside from the current stock price. This recovery potential, combined with the company’s strong market position, presents Latham as an attractive long-term investment with a significant asymmetric upside.

Latham Group, Inc. (SWIM) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held SWIM at the end of the third quarter which was 13 in the previous quarter. While we acknowledge the risk and potential of SWIM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SWIM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.