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Argan, Inc. (0HHO.L)

LSE - LSE Delayed price. Currency in USD
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44.62+44.62 (-18.49%)
At close: 06:00AM GMT
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  • A
    Arlind
    Investing right now will be at every wise individual list. In few weeks you'll be ecstatic with the decision you made today
  • r
    rick
    AGX gives a large one time dividend every other year. They are due. Lots of cash came in with completion of last project. And new largest one just signed.
  • J
    Joseph
    As a value investor, I've found that sometimes it takes longer than you want for a thesis to play out. However, I've noticed that around the time I begin to doubt my conviction or get fatigued by the delay, the inflection point happens. The point is, I'm buying heavily now at these levels.

    Here's something to consider: the low for this stock was $29.91. That occurred in March when the world was ending. Today, AGX has $28 of CASH per share. So you would have been pay a buck for all future income streams. So, I feel comfortable penciling in $30 as the max draw down on the stock.

    If you back out the cash, you're now paying about $18/share for the business. I think the business will easily book between $2.00 - $3.00/share of Net Income for the next few years....even if they do not grow the backlog. Hopefully, we'll get some positive news regarding new projects. In the meantime, we'll be paid to wait.

    I'm allocating cash to average down into another 6,000 shares starting today.
  • J
    Joseph
    I like to invest in cash heavy, simple balance sheets. This strategy hasn't been optimal lately, but I'll stick to it.

    When I think about the operations of Argan, I put it into a category I call "ESG adapters." Loosely stated, these are companies who are having to shift their strategy or product mix to meet the market/policy demands around ESG. In Agran's case, they are a best-in-class EPC firm who will have to shift into green construction projects, while continuing to operate their traditional gas-fired business. I firmly believe they can do this.

    There are other companies I hold that are working through the same issue:

    Calm-Maine (CALM): shifting from caged egg production to cage-free,
    Altria (MO): shifting customers from smoking to non-combustibles,
    Exxon (XOM): building renewables alongside hydrocarbons

    The key is to pivot while continuing to dominate your traditional market. This is tricky and requires patience.
  • F
    Frank
    AGX beats on revenue ($116.459mm v $101.600mm) and EPS ($2.07 v $0.34). Cash is still strong and report says that they are expecting to start work on another $1.5 bln in projects in 2019. TTM EPS gives it a 10 P/E. TTM EPS x-cash gives it a 5 P/E. Expecting growth and higher prices!
  • J
    Joseph
    The Chickahominy project got approval to proceed from the Virginia DEQ. Final document in link.
    I'm not familiar with the process, but isn't this the main hurdle to overcome? Can we pencil in another ~$500 MM in backlog at this point. Or is this project still at major risk?

    https://www.deq.virginia.gov/Portals/0/DEQ/Air/Chickahominy_Power_Plant/Documents/52610_Chickahominy_Power_Station_final_issued_permit.pdf
  • J
    Joseph
    I'm back amigos....30 day period no the sidelines is complete.
    How're we feeling about AGX these days? We've made it back to pre-covid levels on the stock. YOY revenues ought to be impressive this quarter.
    Unless there's been serious impairment to the backlog, I'm still bullish.
    Side note: Saw a ton of volume earlier in the week. Can AGX repurchase it's shares leading into the earnings week?
  • M
    Matt
    Does anyone here see any threat to this stock from Coronavirus? Apart from the risk of short term construction delays, which I think are unlikely, I don’t see a scenario where the current project backlog and financial performance are affected by the same forces that are driving the market selloff. And I certainly don’t think it affects their ability to pick up new contracts longer term. Thoughts?
  • F
    Frank
    I am wondering if there is any color on AGX's upward daily price movement? The market is down 300 points today and AGX is up 0.46. Was there tax loss selling in December? Does anyone think that some of those sellers are getting back in now that the 30 day period is ending? Volume starts low but gets heavy later in the day. Are there any announcements coming from AGX? Either way I like the price action in a mixed market.
  • A
    Andy
    Beautiful. Huge beat by Argan. The company was expected to post net income of $0.40 per share for Q2. AGX posted the Q2 results after the close of the market today. They brought in more than $16 million. This comes to $1.08 per share. They beat analysts’ estimate soundly, posting 270% of the consensus analyst estimate. This is a HUGE beat. The company has higher bookings and has hugely beaten expectations. AGX is likely headed to over $50 per share this year.
  • J
    Jazenevd
    Earning release seems to be clear enough: constructing one plant is not enough to break even. I do not have enough experience here, but it seems company constructed 4-5 plants simultaneously in good times. It makes this investment case: once they announce start of second plant construction, whatever it is, one may expect break-even results; until then expect red inks. Could this stock be bought while red inks are in place? It is doable, but I would prefer in this case to see share price getting closer to book value, e.g. declining to high 20s before purchase could be made.
    In total, either second plant or 20s.
  • A
    Andy
    In 2018, the USA used a record amount of electricity. Electricity usage in 2018 was significantly higher than that used in 2017. It wasn’t just a few 100 Billion Watt-Hr. In fact, 2018 usage was over 45,000 Billion Watt-Hr larger than used in 2017. That is 45 TeraWatt-Hr beyond the prior year. With electric cars and with datacenters and with air conditioners and increased shift from natural gas to electricity and increased population, we will likely see the USA energy usage to continue to expand. This is a great time for electrical generation companies. AGX is at a bargain price and operating with the right capability at a great time. Over $50 per share is coming within the next few months.
  • F
    Frank
    I just looked at the 'statistics" page on yahoo finance. It says that AGX has 18.84 in cash per share-almost $300mm. There is no debt. It says that 6.27% of the float are shares that are shorted or 928,980 shares. Then I looked at a 5 year chart of AGX. It showed that from 1/2016 to 1/2017 the stock went from 29 to 75. I think the contributors to this board are very smart. I liked the comment that said that AGX does not count a project till there is no chance of it not happening (Chickahominy). I think AGX is at least 5 points undervalued due to year end tax loss selling. I also think that with the backlog at $1.4 billion and more projects on the way, that AGX will probably reach the $60 level during 2020 if not more. The stock is not that liquid and I think we went way too far to the downside. I think we can see the same thing on the upside.
  • J
    Joseph
    While I'm grateful for a potential dividend reinvestment under $40, I look forward to reading some positive developments that the market can get behind. This has been a slow grind between cycles.
  • E
    Eric
    As of July 31, 2021, cash, cash equivalents and short-term investments totaled $491 million.
    Why they don't do something with this money!?

    MC 708M - EV 220M.
    Free cashflow per year at about :100M
    Yield free cashflow / EV = 45%!

    When they don't do something with this money better to repurchase shares?
  • F
    Frank
    The last 5 days have had a big selloff. Could it be tax loss selling? Most selloffs have been 4-6 days in duration looking at a 6 month chart. Hopefully this ends soon. Let us get some good news on Chickahominy.
  • Y
    Yahoo Finance Insights
    Argan reached a 52 Week low at 38.67
  • F
    Frank
    Eliot Murray penned a good article on AGX this morning on Seeking Alpha. He is pointing out that the AGX (Gemma Power Systems) backlog is back to 1.2Bln. He counts the new contract for the 1,600MW Chickohominy project as worth $ 0.8 Bln in backlog. Contract is signed. He says the total backlog is at $1.2Bln. It looks like the backlog is building. While Mr. Murray thinks the backlog could grow to over $2Bln and the stock price as high as 100, his conservative analysis pegs the stock at 68. Lots of upside on the way!
  • F
    Frank
    I admit that AGX is not that liquid. Today the range is 34.11-36.75 on about 27,000 shares traded. I am long this stock. I look at it as it has a market cap of $564mln. There is no debt. There is cash or cash equivalents of $327mln. If you count the 2 projects signed recently the backlog is over $3bln. Yes the APC project did not work. The profits are lumpy. I like the institutional holders. Management is conservative-much more conservative than other companies. This is a long term hold and I expect to see it in the 60's before long.
  • J
    Joseph
    Sold all of my shares yesterday afternoon. AGX now has the green light to scream higher.
    You're welcome.