Argan is the IBD Stock of the Day as the heavy construction company's stock finds support at its 10-week moving average.
Heavy construction may sound like a misnomer for this company, which provides the building muscle for high-tech data centers and other industries facing heavy demand for electricity, such as EVs. Some of its projects are for clean-energy sources, too. Meanwhile, tariffs are motivating companies to move manufacturing onto U.S. soil, which is also driving demand for Argan's construction expertise.
"Our project pipeline is robust and reflects both the need for new energy resources as a large portion of natural gas-fired plants reach the end of operational life, and the urgency around building new infrastructure to meet the unprecedented growth in power consumption," CEO David Watson said in the company's June 4 earnings report.
"Power demand has reached its highest level in two decades and is expected to increase further with the development of AI data centers, the onshoring of complex manufacturing, and the growing adoption of electric vehicles that need charging."
Argan's expertise in the construction of combined-cycle natural gas facilities is especially sought these days. "We're energized about the demand environment, which we believe will present attractive project opportunities for the next decade and beyond," Watson added.
Top Ratings In Leading Industry Group
The stock has the highest EPS Rating (99) of the 24 stocks in the heavy construction industry group, powered by EPS gains of 39%, 400%, 149% and 176% the past four quarters. Sales increased 61%, 57%, 41% and 23%.
Analysts expect the torrid growth to slow down, however. The consensus earnings estimate for the current quarter is $1.50 a share, up 15%. Earnings are seen falling 15% and 18% the next two quarters as they run up against tough year-earlier comparisons. Analysts estimate July-quarter sales will edge up 1% $229.5 million, according to FactSet.
The heavy construction group is a market leader in its own right. It ranks No. 20 out of 197. Argan also has one of the highest Composite Ratings in the group, at 98, according to IBD Stock Checkup.
Additionally, Argan is in the IBD 50 index of top growth stocks.
Stock Of The Day In Buy Area
Argan stock pulled back to the 10-week line last week, and has been rebounding, according to IBD MarketSurge. The stock on Monday also broke above a trendline with an entry around 214. In either case, the stock is actionable right now. Plus, the June 30 high acts as a natural resistance-level buy point.
The relative strength line is lagging, although institutional demand is evident in the stock's Accumulation/Distribution Rating of B and up-down volume ratio of 1.7.
The share price has soared more than 350% since it cleared a long consolidation period in March 2024. But a 47%-deep decline from January to May this year reset the base count. That means the stock no longer faces the risk of being a late-stage base.
Argan stock has a 21-day average true range (ATR) of 4.56%. The average true range is a metric available on MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
