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Why Hold Strategy is Apt for Booz Allen (BAH) Stock Now?

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A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions.

Here we discuss about Booz Allen Hamilton Holding Corporation (BAH - Free Report) , a stock that has rallied a massive 31.4% year to date, significantly outperforming the industry’s 19.3% growth. The long-term (three to five years) expected earnings per share growth rate for the company is 11.2%.

We believe that the company has the ability to sustain this momentum, courtesy of its focus on sustainable long-term growth and a strong solutions business.

Implementing Vision 2020

Booz Allen is currently in the process of implementing Vision 2020, a strategy aimed at countering competition and achieving sustainable long-term growth. The strategy focuses on getting closer to clients’ core missions, increasing technical content of work, attracting and retaining talent from diverse areas of expertise, increasing innovation, creating a wide network of external partners and alliances and expansion into commercial and international business.

Through implementation of Vision 2020, Booz Allen is seeing significantly higher backlog growth, a shift in talent to more technical expertise, strong performance in the global commercial market as well as disciplined acquisition. The company acquired the technology firm, Morphick, in October 2017 to expand its managed security portfolio and increase capacity to help clients offset advanced cyber threats.

Booz Allen Hamilton Holding Corporation Revenue (TTM)

Strong Solutions Business

Booz Allen developed its solutions business in a way that it creates differentiated business models and sales channels, increases client acquisition and enhances future revenue opportunities. The company also differentiated itself in the talent market so as to ensure attraction and retention of quality talent from diverse disciplines.

These initiatives bumped up its ability to bring a variety of offerings through which, it has been winning highly technical, mission-critical work for its federal government business. All these ensure long-term sustainable growth for the company.

Zacks Rank & Key Picks

Currently, Booz Allen carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Business Services sector include CRA International (CRAI - Free Report) , FTI Consulting (FCN - Free Report) and NV5 Global (NVEE - Free Report) . While CRA International and FTI Consulting sport a Zacks Rank #1 (Strong Buy), NV5 Global carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CRA International, FTI Consulting and NV5 Global have an impressive earnings surprise history, having delivered an average four-quarter surprise of 38.6%, 58.3% and 12.7%, respectively.

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