Timing can make or break a trade. And right now, sellers are sending the stock of data-center power play Argan lower after a huge run as the company prepares for its third-quarter report.
As of Wednesday, shares have been down for two days, but the pullback may turn out to be just a blip and a buying opportunity — especially if investors like what they see in Thursday's report. That makes Argan a selection for IBD 50 Growth Stocks To Watch.
The stock gained 73% after gapping up in September, when the energy industry provider reported fiscal 2025 second-quarter results (its fiscal year ends in January). While impressive, it did not give investors who missed the earnings-fueled jump a chance to get into the stock, since it offered no buy point from a proper base.
Here's how Argan got its bump. Sales rose 61% to $227 million while earnings per share of $1.31 increased 39% from the prior year. Both came in well ahead of views.
Demand from two high-growth industries — data centers that power artificial intelligence workloads and electric vehicles — helped the stock soar to its all-time high without once breaking its line of support at the 50-day moving average.
Chief Executive David Watson noted in the company's earnings press release that "the addition of high energy demand data centers, the onshoring of manufacturing operations and the expansion of electric vehicle use are primary drivers of the increasing forecasts of future electrical power demands and the robust pipeline of new business opportunities."
Data Center Stock Works On A Base After All-Time High
This week, the stock has pulled back 9% as of Tuesday's closing price and could well be on its way to build a flat base with its all-time high of 165.33 as the new buy point.
For the third quarter, which ended in October, analysts expect sales to increase 38% to $225.6 million. Earnings are seen at $1.26 a share, which would be 215% higher than the third quarter of fiscal 2024.
Argan's technical strength beats the vast majority of stocks in the Investor's Business Daily database. The Composite Rating is an ideal 99 while the Relative Strength Rating is almost as good, standing at 98.
The EPS Rating of 97, which gives added weight to recent earnings performance, shows recent outperformance as well. That is because after two quarters of declining earnings per share, Argan posted strong earnings growth in its first and second quarters of 2025.
Argan stock ranks first in the building and heavy construction group, according to IBD Stock Checkup. Mutual funds own 54% of outstanding shares, with more funds adding the stock in the past two quarters.
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