Booz Allen Hamilton, A Cheap "MilTech" Stock?

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An unloved government contractor that’s down more than 50% in one year?

Booz Allen Hamilton Holding Corporation ($BAH) is a defense contractor and consulting firm with an interesting history.

Booz Allen Hamilton helped design the Hubble Space Telescope, assisted the U.S. Navy in modernizing its GPS systems, coined the term "supply chain management," and is currently developing direct-energy weapons for DARPA.

Fun fact: Booz Allen Hamilton also played a pivotal role in the AFL-NFL merger. And it still advises sports organizations today.

I’m a huge fan of military contracting stocks and “Deep State” military technology firms that work with DARPA. For the unfamiliar, DARPA — an acronym for “Defense Advanced Research Projects Agency” — commissions cutting-edge projects that are decades ahead of anything produced on the civilian market.

DARPA’s “Aspen Movie Map” was a precursor to Google Maps, released in 1978.

Likewise, the Internet itself is a DARPA invention.

Other DARPA inventions include: GPS, onion routing (the foundation of Tor), the graphical user interface, and even Siri.

Also, there’s a popular theory that Facebook was initially a DARPA project due to its eerie similarity to the institute's “LifeLog” program. Although there’s never been any concrete proof of a direct link.

Switching back to military contracting, military contractors often have an enormous backlog of projects and orders that provide cash flow for decades.

Likewise, these firms produce proprietary weapons, strategies, and systems that cannot be shared or replicated.

In late 2024, there was an irrational sell-off in Huntington Ingalls Industries stock when investors panicked about government spending. People worried that Huntington Ingalls, a shipbuilder with a monopoly on aircraft carriers and a duopoly on submarines, would suffer from government cutbacks. The stock plummeted, only to surge by over +60% in 2025.

Now, Booz Allen Hamilton is in the same position.

The U.S. Department of Defense canceled several IT and consulting contracts, totaling $5.1 billion. These affected Booz Allen Hamilton, Accenture, Deloitte, and other firms.

However, each of these firms still has hundreds of government contracts.

And even with the cutbacks, Booz Allen Hamilton is still signing new deals.

In May of this year, the company was awarded over $1.2 billion in new military and government contracts.

If you’ve followed the recent White House renovations, you may also recognize that Booz Allen Hamilton is a major donor to the project. A sign that the firm wants to stay in the government’s good graces.

Lastly, Booz Allen Hamilton is still a profitable company.

Here’s what the corporate metrics currently look like:

• P/E ratio: 15.56

• Dividend yield: 2.54%

• 5-year dividend CAGR: 12.47%

• Payout ratio: 35.24%

The low payout ratio is especially important. It signifies that the dividend is safe and has plenty of room for future growth.

Even with the firm down by more than 50% in the past 12 months, Booz Allen Hamilton has still delivered a 10-year average annual total return of 13.19%. Pretty good for a company that’s currently in turmoil.

Will Booz Allen Hamilton rebound as quickly as Huntington Ingalls Industries?

No one can predict the future.

But this is a profitable company with strong government ties, and a beaten-down valuation. This combination could make Booz Allen Hamilton an interesting rebound play that also pays dividends while you wait.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.