In many ways, the history of Pool Corp. (Nasdaq: POOL, $40.54) reads much like a page out of the Wal-Mart storybook.

The company began back in 1993 as a tiny one-store operation on the outskirts of New Orleans. A little more than 13 years and several dozen acquisitions later, Pool Corp. has grown to become the world's largest wholesale distributor of swimming pool supplies -- selling more than 100,000 different products from a nationwide network of 275 customer service centers.

In 1996, POOL booked a paltry annual profit of $4 million on approximately $236 million in sales. However, the rapidly expanding firm has since posted ten consecutive years of record revenues and earnings -- with those two key measures now standing at $1.8 billion and $96 million, respectively.

Along the way, the company has picked up more than 70,000 wholesale customers throughout North America and Europe, mostly swimming pool builders, service companies, and retail outlets.

Of course, this tremendous growth has translated into equally impressive gains for shareholders. Since hitting the market with a splash at a split-adjusted price below $1.00 per share, the stock has since soared to over $40 -- making POOL a 40-bagger!

While that type of growth is simply unsustainable over the long haul, the company still has plenty of upside potential left.

According to Investor's Business Daily, the base of installed swimming pools in the U.S. currently stands at more than 7 million, and another 200,000 are built every year. Naturally, once homeowners have made the commitment to install a pool, a good deal of routine maintenance comes with the territory.

With a commanding 50% market share (and no large-scale national rivals), much of that business inevitably finds its way to POOL. However, by some estimates, the firm has tapped just 10% of the overall domestic market -- leaving plenty of growth opportunities for years to come.

Aside from recurring revenues generated from the sale of chemicals, filters, and other everyday items, the firm has also branched out into the sale of complementary products like patio furniture, spas, and pool toys. This area has been growing rapidly -- revenues from complementary products jumped +35% last quarter, and this segment should remain a key growth driver in the years ahead.

With a market cap of around $2 billion, POOL is on the threshold of graduating from small-cap to mid-cap status. However, with incredibly attractive industry fundamentals and few rivals to contend with, this entrenched leader should continue marching towards large-cap territory.

Along the way, we expect the shares to eventually approach, and perhaps even surpass, our $50 fair-value estimate.

Thanks for reading!

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