Argan is a great value construction firm. The company provides construction services for power generation and renewable energy, fabricates industrial steel, installs turbines and boilers, and assembles telecom infrastructure. Its best segment comes from its subsidiary Gemma Power Systems, which has installed 15 gigawatts of power capacity across the U.S. since inception—the equivalent of about six nuclear power plants. Its business is not leveraged.
The company acquired Gemma Power Systems in Dec. 2006 for just $33 million. Since then, the firm has generated over a 75% internal rate of return year over year. Argan also recently secured a $3 billion contract to construct a 6.4-gigawatt natural gas power plant. Before that, it already had more than $1 billion in project backlogs.
Argan had a challenging 2020 when the coronavirus pandemic put a halt to construction activity. The company’s revenue and net loss in that period amounted to $239 million and $42.7 million, respectively. However, this year it expects its sales to rebound sharply to $343 million and break even in terms of net income. Its sales previously hit an all-time high of $893 million in 2018, which then fell sharply as the company encountered significant and escalating difficulties in completing a UK-based biomass power plant.