At first blush, there wouldn't seem to be much in common between Space Shuttle booster rockets, missile parts, and small-caliber ammunition. When you dig a little deeper, though, you see similarities: All of them involve quickly propelling an object over distance and all demand high-precision, high-quality manufacturing. What's more, all of them can be very profitable, as they have a certain "disposable" element to them that mirrors a razor/razor-blade sort of business.

While Alliant Techsystems (NYSE:ATK) is generally thought of as "that bullet company," ammunition is only about 30% of its business. Sales tied to missile propulsion, advanced propulsion and space operations, and precision weapons and sensors all contribute meaningfully to the company's top and bottom lines.

Sales grew by 21% in Alliant Techsystems' third quarter, and orders more than doubled to $1.1 billion. Importantly, there was no pronounced weakness in the quarter, as each of the four major groups demonstrated growth. Margins were a bit weak, though, as gross margin declined by 2%. While management attributed this to a mix of production relocation and some shifts in revenue composition, the trend bears watching.

To its credit, management doesn't waste time with "record earnings" nonsense and instead keeps a close eye on free cash flow generation. While the company has generated about $57 million in free cash flow thus far in fiscal 2005 (ending in March), management expects to post at least $125 million in free cash flow for the fiscal year. This cash will then be put to work reducing debt and buying back shares.

Broad exposure to a variety of weapons and defense systems will be increasingly important to Alliant Techsystems as U.S. military operations in Iraq eventually wind down. While demand for ammunition may drop, there will be ongoing military spending for missile upgrades, missile defense, and various space systems, and Alliant Techsystems is well-positioned for all of those needs.

With a 1.8 book-to-bill ratio and an expectation for over $3 billion in new orders next year, the company is well-positioned to profit from ongoing demand for munitions and other products that go boom. Nevertheless, these shares trade for about 17 times earnings and a whopping 42 enterprise value-to-free cash flow ratio. Though there's no doubt that bullets and missiles are going to stay in demand for some time, that sort of valuation might just be a bit too high-caliber.

Fool contributor Stephen Simpson, a chartered financial analyst, has no ownership interest in any stocks mentioned.