The stock market has shown considerable volatility in early 2026, particularly among some of the renowned “Magnificent Seven” stocks and many software sectors. Investors are grappling with the implications of the ongoing artificial intelligence (AI) boom on various companies. Despite this turbulent landscape, one company has significantly outperformed the market and stands out as a compelling investment opportunity: Pool Corporation, a leading pool supplies distributor.
Year-to-date, Pool Corporation has seen its stock rise over 14%, demonstrating resilience amid broader market fluctuations. Analysts see further potential for upside in the long term and are recommitting to Pool Corporation as a top dividend stock choice.
A key reason for considering Pool Corporation lies in its business model, which appears to counterbalance the prevailing speculation surrounding AI investments in the tech sector. Major technology companies like Meta Platforms, Alphabet, and Amazon have announced substantial capital expenditures exceeding $100 billion in an effort to bolster their AI capabilities. For instance, Amazon has earmarked a staggering $200 billion for capital expenditures in 2026 alone. While these ambitious plans have raised questions of profitability, Pool Corporation operates on a more straightforward and historically profitable business framework.
In the third quarter, Pool Corporation reported sales of approximately $1.5 billion and generated net income of $127 million. Its earnings-per-share growth of 4% outpaced a relatively modest year-over-year revenue increase of just 1%. This financial performance starkly contrasts with the declining margins being experienced by some tech giants, which may face mounting pressure due to their hefty investments in AI.
Looking ahead, there is optimism regarding Pool Corporation’s potential for sales growth despite current economic challenges, including high-interest rates that dampen large discretionary purchases. However, over 60% of Pool’s sales stem from non-discretionary pool maintenance, a segment that consistently performs well regardless of economic conditions. Even in a stagnant environment, sales could improve as the company faces easier annual comparisons.
Management expressed optimism in their latest earnings report, noting signs of stabilization in both new pool construction and remodeling. Although the recovery in this segment is not guaranteed, it remains a possibility. Aging infrastructure means pools will eventually need replacement, which could invigorate demand even under current interest rate conditions.
Investors looking at Pool Corporation today can benefit from a robust dividend yield of 1.9%. The company’s payout ratio stands at 45%, providing significant room for future dividend growth. Additionally, Pool Corporation has been enhancing shareholder value through share repurchases, having bought back $164 million worth of shares in the first nine months of 2025.
Valued at 24 times earnings, Pool Corporation presents an appealing investment proposition. While there remain risks associated with potential declines in sales due to a tough market for pool construction and remodeling, the stock also carries substantial upside potential should recovery materialize. Overall, Pool Corporation offers a balanced risk-reward profile, making it an attractive alternative amidst the heightened enthusiasm and risk associated with AI-driven investments currently dominating the market narrative.
