If there's a race to secure and produce electricity, then there's also a race to build the corresponding power plants and infrastructure. One industrial stock that will benefit from this explosion of power needs is Argan (AGX 4.17%).
Argan is a construction services company with a specific focus on the power industry via engineering, procurement, construction, and consulting.
NYSE: AGX
Key Data Points
A decade of projects ahead
The pipeline for industrial construction projects over the next decade is rapidly growing. From AI data centers to broader electrification, there's going to be an extended period of investment and capital expenditures on power infrastructure.
Image source: Getty Images.
Argan's backlog has ballooned to $3 billion as of its third-quarter fiscal 2026 report, which is a record for the company. Just two quarters ago, this backlog was only $1.4 billion. Argan also has a terrific balance sheet with no debt and nearly $727 million in cash and equivalents.
The greatest risks to Argan right now are in the successful execution of the backlog. Also, concentration risk is a concern in that the company's main sources of revenue are from a few major projects. If there are cancellations or delays, this could significantly impact the stock.
In its latest earnings report, there are some really encouraging signs. Revenue was down in the latest quarter, but that doesn't tell the whole story. In addition to the impressive growth in its backlog, Argan's gross margins are trending up, as well as its net income, earnings per share, and EBITDA.
Buy and hold Argan
Argan stock increased 118% in the past 12 months. The stock is more expensive now; its price-to-sales ratio has more than doubled from January 2025 to January 2026. The stock's trailing price-to-earnings (P/E) ratio is also moving upward, and sits at 45 as of Jan. 16. Still, with the significant power needs in the U.S. and abroad, the higher price seems more than justified.
Overall, Argan is an industrial compounder to buy and hold for the next 10 years.
