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PoolCorp stock went through the roof in 2020. Today we’re discussing PoolCorp (POOL) on Nasdaq. Currently trading for 40 times it’s EBITDA.
Recently PoolCorp stock went through the roof. From March 2020 through November 2020 the stock soared over 130%. The Covington, LA based supplier has a market value of over $15 billion dollars. PoolCorp has managed to stay well ahead of the S&P 500. In earnings forecast for October 2020 the supplier beat earnings forecasts and predicted that it would earn between $8.20 and $8.50 a share for the full year, up from a prior range of $7.05 to $7.45.
Now the new reality, a recent price drop has seen the stock tumble over 16% since Pfizer first announced that it would begin distributing it’s vaccine in November. Investors continue to worry, and have concerns that the companies ballooning stock price is too intrinsically tied to the Covid-19 pandemic. With that being said, during December, the stock price has again begun to rally.
The backlog of demand on pool contractors is predicted to swell well into 2021. Owner Jason De Bosky of Crystal Blue Aquatics in Northern Virginia said “We are nearing capacity right now. We are a fairly large operation and it’s been tough to meet demand this season. Literally everyone wanted a pool this year”.
Executives at PoolCorp remain optimistic that the reversal in fortune in November was a false narrative of a gloomy 2021 forecast. “Pool-focused contractors are slammed,” says Pool Corp. Chief Financial Officer Mark Joslin. “It never gets quantified, it’s all anecdotal, but the anecdote is [the contractors] haven’t seen a market like this before.” – PoolCorp hasn’t lost money for it’s investors since 1994 and trades for roughly 40 times its net earnings. The stock commands a premium because of investor confidence and the stability of the brand.
The market as a whole is positive for pool brands. Leslies (LESL), a smaller pool company, jumped 30% in its October IPO. Originally priced at $14 to $16 a share, it’s currently trading at $28.17 or roughly 52 times estimated 2021 earnings. Whether this market confidence continues into 2021 remains to be seen. Barrons is quite optimistic – and speculates that POOL stock could be worth $423, 16% higher than where it closed Wednesday. We will continue to monitor events as they transpire in the industry and keep you posted.