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Stockchase Insights
Latham Group
SWIM-Q
DON'T BUY
Jul 07, 2025
$6.620
Stock price when the opinion was issued
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TOP PICK
Dominates its industry. Likes an industry especially when that industry isn't growing, as it doesn't attract competitors. 50% market share of fibreglass pools, 5x bigger than the next player. Fibreglass is a better product than concrete, so market share keeps growing. Great CEO.
Pool starts are still way below long-term average, and this should recover over time. Has a presence in Canada, with biggest factory in Kingston ON. No dividend.
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The sector may struggle a bit as the US goes through its current economic transition. Lower interest rates would help here, and so far job numbers have been decent. But depending on tariffs and inflation, there are some risks to consumer spending. SWIM is quite small at less than $1B market cap. Shares are up 156% in the past year and trade now at 76X earnings, certainly on the 'pricey' side of things. But it is well below its $19 2021 IPO price. Debt is very high at 5X cash flow, and it has lost money since inception. A small profit is expected this year. Insiders own 11%, Pamplona Capital owns 45% and the short interest is 11%. The last quarter was solid, but it has missed estimates about 50% of the time. Recent trends are good, but considering its debt, valuation, small size and overall risks, we would not give it a huge endorsement today.
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