Tanks for Nothing, Britain

Once upon a time, "Brittania ruled the waves." But today, the United Kingdom gets the short shrift from defense investors.

I mean, think about a defense stock you might consider buying. (Wait! Are you thinking of buying a defense stock? Don't you realize the industry is doomed?) What companies come to mind? 

Lockheed Martin (NYSE: LMT), perhaps? It's a good choice. Lockheed's got a lock on the F-35 fighter jet, and the decades-long revenue stream that comes with it. 

Boeing (NYSE: BA)? Another strong contender, and its F/A-18 fighter has been making headway as Lockheed works the kinks out of its F-35.

But I doubt you're considering BAE Systems (OTC BB: BAESY.PK). Britain's largest defense contractor boasts $31.4 billion in annual revenues, dwarfing those of America's Textron (NYSE: TXT) or Oshkosh (NYSE: OSK), and approaches rival General Dynamics (NYSE: GD) itself in magnitude. BAE's a veritable jack of all trades, building everything from tanks to submarines to unmanned aerial vehicles for the U.K. military -- and Bradley Fighting Vehicles for ours. It's also arguably one of the more innovative companies in the industry.

Case in point: Early this week, BAE unveiled a "cloak of invisibility" that can make a main battle tank appear to be nothing more than a harmless cow, at least to enemy missiles. The invention, written up on wired.com earlier this week, cloaks a vehicle and absorbs its infrared energy -- then redirects it outward in a heat signature imitative of ... just about anything BAE wants it to reflect. A civilian automobile. A man on a bike. Or yes, even a cow at pasture.

As a result, anyone searching for "something to blow up" with use of infrared vision equipment will see what BAE wants them to. At extended ranges, BAE says it can even make an object invisible to infrared vision, and it's working on making objects invisible to "other parts of the electro-magnetic spectrum" as well. We could be looking at the birth of a true cloak of invisibility here, folks.

What's it mean to you?
Now here's the best part: Judging from the stock price, BAE isn't showing up on investor radar screens either. Right now, this stock sells for just 9.7 times earnings. And if you think that's cheap, you'll be amazed to learn BAE also pays a 6.6% dividend. Growth rates for the company aren't easy to come by, but suffice it to say that unless BAE actually sees profits decline significantly in coming years (and I won't kid you -- it is a possibility), the stock's a real steal.

Interested in learning more about BAE Systems? Add the stock to your Fool Watchlist.