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Several stocks in the swimming pool space have gone public over the past year, while veterans in the industry continue to expand. An analyst cited the opportunity in the sector with a growing total addressable market.
The Pool Stock Analyst: Goldman Sachs analyst Susan Maklari initiated shares of Pool Corporation (NASDAQ:POOL) with a Buy rating and price target of $535.
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Maklari initiated shares of Latham Group Inc (NASDAQ:SWIM) with a Neutral rating and has a price target of $26.
Growing Pool Industry: The total addressable retail market for the U.S. swimming pool industry grew to $20 billion in 2020. Trends including higher outdoor spending by consumers, home prices appreciation and people moving to warmer states are mentioned by the analyst.
“Given these trends, along with favorable company-specific factors, we look for top and bottom-line growth ahead of our broader products coverage, driving our positive overall outlook,” Maklari said.
Goldman Sachs created a proprietary pool model that forecasts 12% growth in 2021 to 108,000 units, and calls for growth of 6% in 2022 and 2% in 2023.
Maklari On PoolCorp: Maklari calls PoolCorp an industry leader that has room to continue to grow.
“As the installed base of in-ground pools expands, we look for the company to leverage its breadth of offerings and geographic reach to deliver above-average growth in revenues, margins and returns.”
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PoolCorp gets 60% of its revenue from everyday maintenance items and 20% from big-ticket repair and restoration projects, the analyst highlights.
A record of strong mergers and acquisitions has helped PoolCorp and could continue to be a catalyst going forward, Maklari said.
Related Link: IPO Preview: UiPath Inc, KnowBe4, ZYmgergen, Latham Holdings Highlight Busy Week Of Offerings
Maklari On Latham Group: Recently public Latham Group received a Neutral rating from Maklari because the shares were already up 50% since the IPO less than one month ago.
“Our outlook reflects Latham’s ability to execute on company-specific initiatives, while leveraging the favorable housing backdrop.”
A shift to fiberglass pools and Latham’s industry-leading position could help the stock. Increased consumer spending on outdoor living spaces such as pools could be a favorable catalyst for Latham Group as well.
Goldman Sachs sees fiberglass pools growing twice as fast as the market from 18% market share in 2020 to 24% in 2023.
Price Action: Shares of Pool Corp are down 1.97% to $427.10 on Tuesday afternoon.
Latham Group shares are down 3.09% to $31.69 on Tuesday afternoon.
(Photo by Karina Miranda on Unsplash)
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.