In the world of homeland security, much of what takes place to keep us safe occurs outside of our borders, where the U.S. may or may not have a presence. To keep an eye out for terrorists, the military has greatly increased the use of predator drone aircraft. These unmanned vehicles are difficult or impossible to detect, allowing for missions in air space that does not belong to us.
AeroVironment (AVAV), which designs, develops, produces and supports unmanned aircraft missions, is a key player in a fast-growing business. This relatively new publicly traded company came to market in 2007, and the challenging economic environment since its initial offering has kept its valuation in check. At the current price of about $27.88 per share, the stock is only slightly above the $24 it fetched on its initial day of trading. The stock may not be doing much since 2007, but operating performance has been stellar. In each of the last four quarters, the company has beaten average Wall Street estimates for profits. Analysts expect double-digit profit growth from this year to the next. With shares trading for 21 times current fiscal-year profit estimates, investors can still buy this homeland growth story at a reasonable price.In the future, I would expect orders for drone aircraft to explode as orders for traditional military craft decline. AeroVironment is poised to benefit from this simple budgetary shift to how the U.S. protects the homeland. To see these stocks in action, visit the 5 Homeland Security Stocks to Buy Safely.-- Written by Jamie Dlugosch in Minneapolis.
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