6 Soaring Defense Stocks

The defense industry remains strong and will get funded

    View All  
6 Soaring Defense Stocks

The Sky’s the Limit

Unmanned aircraft systems, also known as unmanned aerial vehicles (UAVs), have actually been around for a long time. The U.S. military used them as far back as the Vietnam War, when they were known as drones (which they’re still called) and were basically radio-controlled aircraft. Forty years later, they are much more sophisticated, with control and guidance systems and the ability to perform low-level human pilot duties such as speed and flight-path stabilization.

UAVs may be best-known in recent years for spying on terrorists and firing missiles at them. They are a critical reason the U.S. gained military superiority in Afghanistan, and it’s understandable why the demand for UAVs from troops is insatiable, according to Brig. Gen. Kevin Mangum, special assistant to the commanding general of Army Special Operations. Gen. Mangum says ground forces rely on UAVs to do everything from hunting human targets to protecting forces to watching warehouses where balloting is taking place. UAVs have been similarly valuable in Iraq. Col. Donald Hazelwood, who runs the U.S. Army’s unmanned aerial systems project office, called them the unsung heroes in the war. The Pentagon could not actually meet the demand for them and had to ask commanders to separate wants from needs.

The last two Secretaries of Defense have made it clear that U.S. investment in UAVs will not stop. The current secretary, Leon Panetta, in a speech earlier this year outlining cuts in the Defense Department’s proposed 2013 budget, specifically mentioned unmanned systems (along with intelligence systems and Special Forces) as areas where the Pentagon would like to protect or even increase spending. Total expenditures on UAVs are expected to nearly double in the next decade from $5.9 billion to $11.3 billion, according to a study by defense consulting firm the Teal Group. This growth will be driven by the changing needs of the U.S. military, including increased intelligence, surveillance and reconnaissance. It’s also expected that more technological advancements in the future will improve the military capabilities of UAVs.

So demand is growing for UAVs and there is some spending certainty in the otherwise uncertain defense industry, but have you also heard about the move to use UAVs domestically? In mid-February, President Obama signed a law that will expand their current use and allow police and first responders to employ UAVs that are under 4.4 pounds and flown at 400 feet or lower (among other restrictions). In addition, the Federal Aviation Administration needs to come up with plans to safely integrate UAVs into U.S. airspace by or before Sept. 30, 2015, opening up the way for commercial use.

There are many situations in which they could be valuable, from dusting crops to finding lost people or criminals on the run to monitoring traffic, wildlife, and disasters like oil spills, just to name a few. Much of the current debate focuses on privacy and safety concerns (unmanned aircraft crash more often than manned aircraft), and those are serious issues to be worked out, but it’s clear that UAVs will see more and more use inside the United States in the coming years as well.


Article printed from InvestorPlace Media, http://investorplace.com/2012/04/going-on-the-defense-ba-utx-gd-noc-lmt-rtn/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.