Defense Investing in a Post-bin Laden World

Following the death of Osama bin Laden, debates stirred across the world regarding the potential pullout of coalition forces from Afghanistan and the end of the decade-long conflict affecting the region. Various heads of state have mulled the option of withdrawing troops once the nation-building process is set in motion. Targeted strikes at terror hotspots might increasingly become the order of the day, instead of an actual army presence in the area.

On the other hand, many experts believe that bin Laden's death will do little to sway Al Qaeda from its objectives. Whatever the future holds, Fools should take notice that even though war is always ugly, there are opportunities worth paying attention to here, as well as on other troubled fronts around the world.

All guns blazing
Militaries far and wide -- including the United States, Greece, Israel, the UK, and the United Arab Emirates -- use the AH64D Apache Longbow helicopter from Boeing (NYSE: BA  ) . Several other warplanes in the U.S. military come from the Boeing hangars as well.

On the Afghan front, targeted attacks on terror establishments could keep terror groups muzzled for far cheaper than other options. Meanwhile, the focus of U.S. and allied efforts could shift to Pakistan. Even before bin Laden's death, drone attacks on Pakistani soil were on the rise, while the political debate has shifted to whether a prolonged military presence in Afghanistan is even feasible.

With the increasing use of robotic military technology here and elsewhere, companies such as Northrop Grumman (NYSE: NOC  ) and AeroVironment (Nasdaq: AVAV  ) could see a spike in the number of orders for unmanned aerial vehicles. Northrop has recently come up with a long-endurance unmanned spy plane called the Firebird, which can carry pilots in addition to going on unmanned attack flights.

Foolish take
As war moves away from the battlefield with the help of 21st-century technology and tools such as UAVs begin to dominate, companies that specialize in these weapon systems stand to make significant gains. As war efforts escalate, the need for new technologies will follow. Fools would be wise to keep an eye on the latest developments.

Fool contributor Arunava De owns no shares of the companies mentioned here. The Motley Fool owns shares of Northrop Grumman and Lockheed Martin. Motley Fool newsletter services have recommended AeroVironment. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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