We recently published a list of the 10 Best Small-Cap Stocks to Buy Now. In this article, we are going to take a look at where Argan, Inc. (NYSE:AGX) stands against the other small-cap stocks.
The S&P 500 index has reached its all-time highs, achieving returns of over 20% for the second consecutive year post-COVID. With the index hitting all-time highs, small-cap stocks can be a good option to explore with higher growth potential in the long term.
However, the Russell 2000 small-cap index returned a little over 7% in 2024 compared to the 23% returns by the S&P 500. Over the past five years (through February 25, 2025), the S&P 500 has almost doubled the return of the Russell 2000 small cap, with returns of 102% against 47%, respectively.
Small-Cap Stocks Prospects in 2025
On December 30, MJP Wealth Advisors chief investment officer Brian Vendig appeared on Yahoo! Finance’s Catalysts to address the potential outlook of small-cap stocks in 2025. Vendig said that a stable economy and policy will positively impact the small-caps, creating business expansion and merger opportunities. However, the Trump administration’s harsh tariff policies could impact the broader small-cap stocks as these companies contribute significantly to the U.S. domestic market.
The role of the Fed will also be key in keeping the economy afloat. Vendig said that the market is expected to be choppy in the first few months of 2025. Businesses will start to progress in the second half of 2025 as the policies become clearer. However, Vendig believed that if earnings remain intact, he will likely stay constructive on stocks. He is also bullish on bonds, which might be a good opportunity as well. He said:
“I’m definitely not one to recommend adding to mega-cap tech at this point, but I think taking a look at some of those value-oriented sectors that help to play into innovation and growth for the economy still makes sense.”
With that said, let’s take a look at the Best Small-Cap Stock to Buy Now.
A construction worker standing atop a metal framework of a newly built structure.
Our Methodology
We used the Finviz stock screener to compile a list of 30 small-cap stocks. We then selected the top 10 best small-cap stocks based on hedge fund sentiment as of Q4 2024. We have used analyst upside, as of February 27, as a secondary metric to rank the stocks with the same number of hedge fund holders. The list is sorted in ascending order of number of hedge fund holders.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Argan, Inc. (NYSE:AGX)
Analyst Upside: 17.11%
No. of Hedge Fund Holders: 33
Argan, Inc. (NYSE:AGX) is a holding company with diversified businesses including construction, power industry services, and telecommunications. The company operates in these various segments through its subsidiaries in each segment. After returning over 170% in 2024, AGX shares are down by almost 7% so far in 2025. Argan is primarily a construction company that does a lot of work in the power industry. The company made remarkable progress last year in the power segment.
Argan’s third quarter 2024 results were one of the best in its history. The company posted a revenue of $257 million in Q3, up by 47% from a year ago. The power services segment was the most dominant segment of the company, with a revenue surge of 75% year-over-year to $212 million, indicating strong performance in both renewable and natural gas projects.
Argan, Inc. (NYSE:AGX) has around $800 million in backlog and continues to increase its revenue. Argan’s subsidiary, Gemma Power Systems, has also obtained the green signal for a 700 MW combined-cycle natural gas-fired power plant in the U.S. The company has a solid balance sheet with approximately $506 million in cash and investments, net liquidity of $281 million, and zero debt. In addition to that, the board has increased AGX’s quarterly dividend by 25%, reflecting confidence in the business and future growth prospects. This shows why investors have been interested in AGX lately.
Overall, AGX ranks 8th on our list of best small-cap stocks to buy now. While we acknowledge the potential of AGX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AGX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
