Josh Brown says this stock on his list is worth stalking for a big move higher

Ferguson (FERG) reported Q2 revenue of $8.8B (+4.6% Y/Y; +3.8% organic) and adjusted EPS of $3.39 (+5.3%), beating consensus ($8.7B revenue; $3.30 EPS). Management raised full-year sales guidance to mid-single-digit growth (from low-to-mid) and lifted the operating margin range bottom to 9.5%–9.8%, with non-residential growth leading (industrial +18%, commercial mechanical +15%). Jefferies reiterated a buy and raised its price target to $289 (about 18% upside), and the stock jumped toward $260 post-earnings before settling around $245 as it remains range-bound near key $250 resistance.

Analysis

FERG is functioning less like a housing beta and more like a picks-and-shovels capex beneficiary. The mix shift toward non-residential and large-project work means the next leg of earnings is tied to data-center, power, pharma, and industrial buildouts, which are stickier than discretionary home repair and less rate-sensitive than the market assumes. That should support estimate revisions even if residential remains soft, while smaller regional distributors with less SKU breadth and weaker local routing lose share to a national platform that can cross-sell plumbing plus HVAC.

The near-term issue is valuation discipline: the stock is being asked to re-rate on a mid-single-digit growth profile, so any hesitation in backlog conversion or a slowdown in project awards can compress the multiple quickly. The repeated rejection near $250 suggests there is still real supply from event-driven holders and momentum funds, making this a range-trade until a decisive close clears that ceiling. Acquisitions are a secondary risk; roll-up revenue can flatter the topline while hiding integration drag, working-capital strain, or margin dilution if execution slips.

Contrarianly, the market is still treating this as a housing proxy when the earnings quality is increasingly coming from industrial mix and operating leverage, not a cyclical rebound in home demand. If that mix persists, the stock can work even without a housing recovery because the driver becomes margin expansion and multiple durability rather than unit growth. The thesis breaks if backlog growth rolls over, guidance gets reset back down, or price loses the $220 area and enters a lower regime.

Key Decisions for Investors

• Buy FERG on pullbacks into $235-$240 with a 1-3 month target of $260-$270; use a hard stop on a daily close below $220, where the range would likely be failing.
• If FERG closes decisively above $250 on strong volume, add exposure via a 6-12 month 250/290 call spread to capture breakout convexity while limiting premium outlay.
• Pair trade: long FERG / short XHB or ITB for the next 1-3 months to isolate non-residential and project-cycle strength versus housing beta.
• Watch the next backlog/order update as the real falsifier; if open orders stop outpacing reported growth or management trims the margin guide back below 9.5%, de-risk immediately.