Sell Alert: Argan (AGX)

By Jim Pearce • June 1, 2017

TRADE INSTRUCTIONS
Date: June 1, 2017
Name: Argan, Inc.
Symbol: AGX
Type: Close
Limit: Sell at market

TRADE RATIONALE
I am closing out our position in AGX since it closed beneath its stop price yesterday. There hasn’t been any news specific to Argan to explain its descent over the past month, so persistently soft oil prices is the most likely culprit. Argan builds and operates renewable energy projects around the world, the economics of which are comparatively stronger when the price of oil is on the rise. But despite OPEC’s recent agreement to maintain current production limits, oil prices remain low due to a growing supply of natural gas and expanding shale oil production in non-OPEC countries.

AGX is the third portfolio holding I have closed out during the past week (along with CVS and BOFI). Of the nine remaining open positions, seven of them are in the black so I will focus on those as we head into the month of June. I will also add a new position next week, and replace the positions due to close later this month with new picks to keep our portfolio at a total of ten open positions throughout the month.

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Don Voyles

Don Voyles

Consider extending on AGX in view of their new contract to build a sizeable biomass fueled power plant. I really like this company.

Jim Pearce

Jim Pearce

Hi Don. By rule, I must sell a holding if it closes beneath its dividend-adjusted stop price (I suppose I could make an exception every once in a while for cases like this, but then that would call into the question the veracity of the stop prices in the first place). Of course, you are free to ignore that rule and hang onto AGX if you like its longer term prospects. FWIW, many of the stocks identified as a buy by our RPM usually end of outperforming the market in the long run, even if the short-term trade doesn’t always work out.

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