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Northrop Grumman Corporation (NOC), AeroVironment, Inc. (AVAV): Despite Fears, Unmanned Aircraft Are the Future

The Big Kahuna

The Boeing Company (NYSE:BA) is another company in the drone space that would fit well with investors unwilling to bet so heavily on military business. Around 40% of the company’s business is tied to the military, with the rest coming from its dominant perch atop the commercial aircraft industry.

An uptick in commercial aircraft sales has been the driving force behind The Boeing Company (NYSE:BA) lately, despite continued problems with its newest high-tech offering. The company’s results can be volatile because it sells large and expensive products, but over the last three years sales have increased from about $64 billion to over $80 billion, with earnings passing $5 a share in each of the last two years. And it has a backlog of work that should last years into the future.

Although trading near all-time highs, the PE is still just around 20. While not cheap, it isn’t outlandish for a company in a recovering industry that also has such a clearly defined book of business. Growth investors should take a look. Add in the drone business, though, and the picture gets even better.

For example, Boeing’s Phantom Eye high altitude drone is powered by liquid hydrogen and can fly for up to four days carrying 450 pounds, all while sending information back to its controllers. Imagine what the company could do when, not if, it starts to further integrate that type of military technology into commercial aircraft.

Frightening but True

While the idea of unmanned aircraft flying themselves is scary, it’s clearly the science of today. Northrop Grumman Corporation (NYSE:NOC) appears to have the lead, which makes it a key play in the space. AeroVironment, Inc. (NASDAQ:AVAV) is another key drone maker, and a potential takeover target. The Boeing Company (NYSE:BA), meanwhile, is a drone player and has the potential to quickly shift its technology into its surging commercial business.

The article Despite Fears, Unmanned Aircraft Are the Future originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends AeroVironment. The Motley Fool owns shares of AeroVironment and Northrop Grumman. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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