Argan (AGX +3.72%) has silently done a lot for investors as it rides the artificial intelligence (AI) tailwinds. The company specializes in construction and related services for the power industry, and with more tech companies needing power plants, Argan has been quite busy. It also has a $3 billion backlog, which means it will get busier over time.
As Argan continues to deliver, investors continue to reap the rewards, comfortably outpacing the stock market in the process.
Argan vs. the S&P 500
Image source: Getty Images.
This isn't close at all. Argan has more than doubled this year, while the S&P 500 is only up by 16%. The lead gets a lot larger when you zoom out. Argan stock has produced an 868% return over the past three years and a 692% return over the past five years. Yes, there was a big dip from 2020 to 2022, but investors who held are happy that they did.
NYSE: AGX
Key Data Points
The S&P 500 is up by 78% over the past three years and has barely doubled over the past five years. Those returns are respectable, but Argan stock did more in a year than the S&P 500 did in five years.
Argan also comes with a 0.63% yield. It pays a quarterly dividend of $0.50 per share. The quarterly dividend was only $0.375 per share a few months ago, which is a superb 33% growth rate. Argan still has a dividend payout ratio below 20%, so it has the financial strength to boost its dividend by 33% again if the company desired to make that decision.
Be patient with stocks like Argan
Argan demonstrates what can happen if investors remain patient with growth stocks instead of bailing out too early. The company's results for the third quarter of fiscal year 2026, ended Oct. 31, will further test patience, since revenue dipped by 2.3% year over year. Argan attributed the decline to the timing of work performed and its project mix, with recently awarded contracts progressing through early construction stages.
The company remains optimistic, and it's hard to blame it since it has a $3 billion backlog. As a reference, Argan currently has a market cap that's a little above $4 billion. Argan also projected "enhanced profitability for many years to come."
Even the best stocks can have bad quarters and underperform the stock market for brief stretches. You have to look no further than Argan, which wasn't an exciting stock from 2020 to 2022. The stock did well in 2023 but really came to life in 2024 and 2025.
Waiting can be frustrating when you see other stocks outperforming yours, but herds of investors eventually find the hidden gems.
