J.V Smith, Jr.: re: POOL. I'll call it a maybe, but I'll pass it by.
I looked at POOL last year at $12 and passed. I was wrong then (POOL is now 24) and I could very well be wrong now.
I need to know what might make them so special. I didn't understand last year when I superficially looked, and I don't see it now after a quick scan. They distribute pool supplies. Sales have increased 6X in the past few years (to .6 Billion -- not a tiny company anymore), earnings have risen too. Plus this expansion has taken place with no long term debt taken on and not very much increase in stock outstanding. And pe is fairly attractive. All very positive,imo.
But how can this be? They are a distributor of pool supplies. I guess this should be a very competitive business with not much barrier to entry. From the specialty chemical manufacturers and distributors themselves. Why aren't companies like RPM, CENT getting into this apparently very profitable niche business? (EMN bought out Lawter Chemical if I recall correctly and Lawter is also in the same business (if I remember) as POOL>>> + is that POOL might be an acquisition target too for somebody; - is increased competition that might be there from well capitalized competitors) For a growth business,I just don't see how POOL's good numbers can be sustainable. Even after 6 years of proof (-g- I want to see 7 years). If POOL's to be valued as a distributor, then imo, it's too expensive based on book value and price to sales.
All jmo. And I've been wrong many, many times. I might even be wrong many, many times on just this one stock -g-.
Paul Senior |
