Civil engineering stocks: Comfort Systems is no longer alone
2026-07-06 · By Lubin Danilo, founder of Lubin Investment
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The civil engineering and construction sector had only one stock with a maximum quality score in my screener: Comfort Systems USA. A month later, Argan joins it, driven by building gas-fired power plants to feed artificial intelligence data centers. Two companies, two different markets, the same financial discipline.
- Comfort Systems USA (FIX) remains the sector benchmark: heating, ventilation and air conditioning for industrial buildings and data centers, with revenue up 56.8% year over year and a $12.45 billion order backlog.
- Argan (AGX), through its Gemma Power Systems subsidiary, builds gas-fired power plants: it now joins Comfort Systems with a maximum quality score, driven by a record backlog of nearly $3 billion.
- Both companies ride the same tailwind: the electricity and cooling demand created by the massive buildout of data centers for artificial intelligence.
- Comfort Systems trades at 45 times its free cash flow, Argan around 25 times: two very different price levels for comparable quality.
A sector long ignored by quality investors
Civil engineering and construction have a poor reputation in the stock market: thin margins, projects running over budget, heavy dependence on the economic cycle. That reputation is largely earned, most companies in the sector do not pass my quality criteria. But two exceptions show that one specific sub-segment, the one building the physical infrastructure artificial intelligence needs to run, escapes that rule entirely.
| Company | Ticker | Quality score | Valuation (P/FCF) | Specialty |
|---|---|---|---|---|
| Comfort Systems USA | FIX | 10 out of 10 | 45.5x | Cooling and air conditioning for data centers |
| Argan | AGX | 10 out of 10 | 24.8x | Gas-fired power plant construction |
Comfort Systems: cooling the AI factories
Comfort Systems installs, maintains and repairs heating, ventilation, air conditioning and plumbing systems for industrial and commercial buildings across the United States. The real recent growth engine is data centers: an AI server generates significant heat, and it needs cooling systems up to the task to avoid overheating. The concrete result: in Q1 2026, Comfort Systems' revenue jumped 56.8% year over year, and its backlog rose from $6.89 billion to $12.45 billion in a year. The company is even expanding its prefabrication capacity by 30% to keep up with demand.
Argan: building the plants that power those same data centers
Argan operates one step further upstream in the same chain. Through its Gemma Power Systems subsidiary, the company builds natural gas power plants, the type of plant that can be brought online quickly to meet surging electricity demand, unlike nuclear which takes years. Argan is currently building about 6 gigawatts of gas-fired capacity in the US and Ireland, including a 1.2 gigawatt project in Texas for Sandow Lakes Energy. Its backlog has reached a record level of nearly $3 billion, driven precisely by this rush for the electricity that AI data centers need.
On paper, Comfort Systems and Argan have almost nothing in common: one cools buildings, the other builds power plants. But they respond to the same underlying need, a massive physical infrastructure buildout to run artificial intelligence. Electricity upstream (Argan), cooling downstream (Comfort Systems). It is a good illustration of why I prefer looking at a company's numbers rather than its sector label: two companies classified as 'civil engineering' can have completely different growth engines.
Same quality, very different prices
Both companies pass my 10 quality criteria: profitability, consistent revenue and cash growth, high capital returns, manageable debt. Where they diverge is on the price the market is willing to pay for that quality. Comfort Systems trades at 45.5 times its free cash flow, a high level reflecting already spectacular and widely recognized growth. Argan, at 24.8 times its cash, remains notably cheaper for comparable quality, perhaps because the market still associates the company with its older, smaller-cap profile rather than its new trajectory driven by AI-linked energy demand.
The risk not to ignore
The same driver pushing both companies up could, in theory, reverse. If data center construction slowed sharply, for example due to overbuilt capacity or a downturn in AI-related capital spending, both order backlogs would take a direct hit. That is not a scenario I expect in the near term given the scale of investment announced by major tech companies, but it is the kind of thematic concentration risk worth keeping in mind before investing in either one.
How I track this kind of update
This is not the first time I update a sector ranking with a new name: sectors are never frozen, a company can join the top of a ranking from one month to the next as its numbers improve. That is why I recalculate my screener continuously rather than relying on a snapshot taken once a year. Comfort Systems and Argan are today the only two civil engineering stocks passing all my criteria, but this ranking can still shift next quarter.
FAQ
Why do Comfort Systems and Argan score 10 out of 10?
Both pass my 10 quality criteria: profitability, consistent five-year revenue and cash growth, high capital returns and manageable debt.
What is the link between civil engineering and artificial intelligence?
Data centers running AI need massive amounts of electricity (built by Argan) and cooling (installed by Comfort Systems). Both companies benefit from the same investment wave.
Which of the two is cheaper?
Argan trades at about 24.8 times its free cash flow, versus 45.5 times for Comfort Systems. For comparable quality, Argan therefore shows a notably lower valuation.
What is the main risk for both companies?
A sharp slowdown in AI data center investment would directly reduce their order backlogs, which depend heavily on that same dynamic.
Will this ranking change again?
Probably. My screener updates continuously from companies' real numbers, so a new stock can join this ranking as soon as it passes my criteria, just as another can drop out.
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About the author
Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).