Why Booz Allen Hamilton Stock Soured 17% in June

What happened

Shares of government IT contractor Booz Allen Hamilton Holding Corporation (NYSE: BAH) got destroyed in June, falling 17.4%.

So what

It could have been worse. Actually, Booz Allen lost even more than that 17.4% -- 19.6%, to be precise -- in a single miserable trading session on June 16, when news broke that the U.S. Department of Justice was "conducting a civil and criminal investigation" into its wholly owned subsidiary Booz Allen Hamilton Inc.

Booz Allen had actually been aware of the investigation since receiving notification from the DOJ on June 7 that an investigation was underway "relating to certain elements of the Company's cost accounting and indirect cost charging practices with the U.S. government." One imagines that part of the reason investors were so upset was that it took the company nine days to get around to cluing in investors as to the risk.

Now what

Back when this news first broke, I observed:

Two and a half weeks later, Booz Allen Hamilton stock's price has in fact bounced back, by all of 3%. But if you ask me, that just makes a risky and expensive stock slightly more expensive -- without any offsetting reduction in the risk.

To the contrary, since Booz's bad news broke, we've seen dozens of shareholder class action lawsuits announced targeting the stock, and Moody's Investors Service is opining that this investigation could dog Booz Allen stock for "years." Call me a pessimist, but I just don't see any good reason to want to own Booz Allen Hamilton shares for the foreseeable future.

10 stocks we like better than Booz Allen HamiltonWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Booz Allen Hamilton wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 5, 2017

Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.