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ATK's Big Buyout Misses the Mark

By Rich Smith - May 20, 2013 at 1:59PM

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ATK acquires Savage Arms owner Caliber Co -- but pays too much, and gets the wrong kind of growth.

Five months after the Sandy Hook shootings sent Wall Street scrambling away from anything having anything to do with guns, investors are starting to return to the sector. Last week, ATK  (NYSE: ATK) announced a deal to buy Savage Arms owner Caliber Co. for $315 million cash.

But issues of gun control and gun regulation aside, is this a good deal for ATK shareholders? contributor Rich Smith doesn't think so. Among gun companies, he thinks either Smith & Wesson ( SWBI -28.72% ) or Sturm, Ruger ( RGR -9.84% ) are better bargains. And in ATK's case, there's a good case to be made against buying any gun companies at all...

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Smith & Wesson Brands, Inc. Stock Quote
Smith & Wesson Brands, Inc.
$16.33 (-28.72%) $-6.58
Sturm, Ruger & Company, Inc. Stock Quote
Sturm, Ruger & Company, Inc.
$64.51 (-9.84%) $-7.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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