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Is Israel Building an All-Drone Army?

When you hear the word "drone," do you picture a small robotic airplane, flying through the sky bearing a stars-and-stripes decal on its chassis? If you do, then chances are you live in America.

Because for most of the world, drones more often than not bear the flag of Israel as an insignia.

According to CNN, the state of Israel is the largest exporter of drones and drone technology in the world. Leading Israeli defense concern Israel Aerospace Industries, or IAI, counts as its customers the military forces of more than two-dozen nations around the world. These customers buy Israeli drones first and foremost because they're easier to acquire than American models -- where sales can be held up by government restrictions on drone exports. But customers also flock to buy Israeli drones because they work.

In fact, they work so well that Israel may be replacing its manned combat aircraft with robotic drones.

Israeli AH-1 Cobra -- doomed to extinction by a new generation of armed drone aircraft? Photo: Wikimedia Commons.

Building a drone empire in the Middle East
Israel recently announced a plan to retire 33 Textron (NYSE: TXT  ) AH-1 Cobra helicopter gunships. News reports suggest that the Cobras' role will, in the future, be taken over by unmanned "drone" aircraft -- armed to the teeth with air-to-surface guided missiles. Already, one former Israeli Cobra squadron is said to have been equipped with Israeli "Hermes 900" unmanned aerial vehicles.

While Israel's defense ministry won't comment on reports of its possessing "weaponized" drones, media outlets around the Middle East have reported seeing Israeli drones conducting armed operations as far back as 2006. This backs up rumors of a shift to armed drones. And there would be sound logic supporting such a move, if it is indeed happening.

UAVs offer many advantages over piloted helicopters. Piloted remotely, they eliminate the risk of Israeli pilots being killed or wounded in combat -- or taken prisoner. Israel's drones can also fly for 12 hours and up, versus about 90 minutes for an AH-1 Cobra. They're cheaper to operate -- and in many cases, cheaper to buy.

IAI "Ghost" small robotic helicopter. Photo: IAI.

An Elbit Systems (NASDAQ: ESLT  ) Hermes 450 drone can fly for up to 20 hours without refueling, and is big enough to carry a pair of Hellfire missiles on its wings. It costs only $2 million -- about one-fifth the cost of a modern Cobra. A larger IAI Heron, priced similarly to a Cobra, can stay aloft even longer -- up to 52 hours straight. Israel is believed to have loaded (and fired) homegrown "Spike" missiles (similar in size to Hellfires) aboard Herons on combat missions in both Lebanon and Gaza -- although Israel refuses to confirm this.

Israel includes upwards of 60 drones in its own air fleet, with dozens more having been sold abroad. Weapons-capable Israeli drones range in size from IAI's tiny Panther, Bird Eye, and Ghost UAVs, to Elbit's Hermes 450 and Hermes 900 (1.1 tons, and with twice the Hermes 450's missile payload), to IAI's larger Heron and Heron TP drones -- the latter a beast massing 4.6 tons and capable of flying at altitudes up to 45,000 feet.

Offering buyers drones for just about any mission they can think up, Israel holds a commanding position in the international market for unmanned aerial vehicles. And as military tech website StrategyPage points out, thanks to Israel's near-constant state of hostilty with its neighbors, its drones are all "combat proven."

IAI's Heron TP -- also known as the "Eitan." Photo: IAI.

Israel's armed drones -- a threat to U.S. defense contractors?
Already the leading international seller of drones and drone technology, Israel's increasing (if unconfirmed) experience with use of armed drones in combat will only heighten its competitive advantage over U.S. defense contractors, which sell mainly unarmed drones internationally.

Of the two leading drone manufacturers in Israel, only one is publicly traded: Elbit Systems. With under $3 billion in annual sales, the company is small enough that even a small uptick in international drone sales could "move the needle" on the stock. What's more, analysts call Elbit's Hermes 900 drone "the most likely candidate for an Israeli attack drone to replace the Cobra" in the home market as well.

Bot these facts make Elbit an intriguing pick for investors in the defense industry, willing to look beyond U.S. borders. And the best part? Elbit also trades for an attractive valuation of just 0.9 times annual sales, a cheaper price than you'll find at just about any U.S.-based defense contractor.

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Read/Post Comments (12) | Recommend This Article (17)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 15, 2014, at 4:42 PM, Blindsquirl wrote:

    Can I PURCHASE one of these Israeli drones, for use here in America... WITHOUT "breaking" any laws.?

  • Report this Comment On June 15, 2014, at 8:21 PM, rav55 wrote:


    Actually Isreal is a moderating force in the middle east. They are the best friend the Arabs ever had in terms of Arab unity.

    Without Isreal, they would be fighting each other.

    Oh, gee whiz they are fighting each other!!

    That's because they can't beat the quality of the Irseali Defense Forces.

    Yes the US and many other countries gave obsolete weapons to Isreal during it's many wars of extermination waged upon it by it's neighbors.

    And as we have seen. It is not he quality of the weapon that wins wars, but rather the quality and motivation of the shooter.

    Another thing, why should we disagree with history?

    History has shown us that land belongs to those who can take it and keep it.

    Like it or not, that's the way it is.

    And regarding apartheid:

    Nearly one-third of the registered Palestine refugees, more than 1.5 million individuals, live in 58 recognized Palestine refugee camps in Jordan, Lebanon, the Syrian Arab Republic, the Gaza Strip and the West Bank, including East Jerusalem.

    Israel's Arab also discriminate against the Palestinian refugees. Why, so they can point to world and show the squalor that they live in and then say it's Irael's fault. THe Arab world refuses to allow Plestinians to assimilate into society.

  • Report this Comment On June 15, 2014, at 9:28 PM, popsdamann wrote:

    these mofo's know how to war. my moneys with them!!

  • Report this Comment On June 15, 2014, at 9:45 PM, Leeland2 wrote:

    Drones, V1 rockets from the Nazi's. Hitler's biggest dream. The truth, is they did not work, and regardless of the mapping of the world. Dual control by human and machine have always been the best case scenario, regardless of the technology.

    Even North Korea has the capability to knock GSM satellites out of the air, which dooms the drone, ATM and the economy of the world.

  • Report this Comment On June 15, 2014, at 9:59 PM, vet212 wrote:

    Not hardly, Israel has better sense than American Democratic party members. you cam kill em with Drones but you can't find them with them

  • Report this Comment On June 15, 2014, at 10:15 PM, bosbro wrote:

    Actually, US drones are just more expensive and too complex. But they are the best. Given the choice, and the money most countries would rather buy American. Truth be told, the Israelis sell cheap, but there's a hidden cost, which Adds up- they aren't as good and there are quality issues with them. Maybe not the ones flying around Isareland parts, but the models they sell everyone else. Jus saying, they started it all- our Hunter drones were Israeli licensed.

  • Report this Comment On June 16, 2014, at 7:12 AM, tonybudz wrote:

    Little boys with their remote controlled airplanes, I swear..

  • Report this Comment On June 16, 2014, at 3:04 PM, smilingdon wrote:

    Who was that masked drone?

  • Report this Comment On June 17, 2014, at 12:47 PM, martiinsu wrote:

    Why can't the Nigerian govt buy these drones to eliminate these Boko Haram Islamic robbers. Nigeria is rich enough to buy thousands of these drones

  • Report this Comment On June 17, 2014, at 1:21 PM, harley121 wrote:

    Is Israel Building an All-Drone Army??? I hope so. GO Israel go!!!! Please do not make the mistake that Obama will work with you!!! Hell, he hasn't worked for the Americans, why would he help you! Do what you have to do to protect yourself!

  • Report this Comment On June 17, 2014, at 4:12 PM, ecoavila wrote:

    Wisdom from the Dome ESLT.0j0/USArmyStrong AmericanKnowhow WallStreetServivor/strongbuy pass apple able to leap tall numbers in the sky 0j0/ESLT Great tec&people4evrlastingHey by the way View Systems Inc. with American electromagnetic rule overwmd.

    ESLT reverse-merger with vsym make the people of books&computers very happy 4evrlasting.

  • Report this Comment On June 17, 2014, at 9:23 PM, McBearsNY wrote:

    some experts are predicting the chinese will be the worlds largest exporter in a few years flooding the market with cheaper lower tech drones, Israel has great drones but they still have not been able to field jet powered drones and none of the newer batwing or flying wing configuration drones which require very sophisticated computers to fly, several nations are already fielding such aircraft

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Rich Smith

As a defense writer for The Motley Fool, I focus on defense and aerospace stocks. My job? Every day of the week, I'm monitoring the news, figuring out the winners and losers, and tracking down the promising companies for you to invest in. Follow me on Twitter or Facebook for the most important developments in defense & aerospace, and other great stories.

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