"There are those that see JSF as the last manned fighter. I'm one that's inclined to believe that."
-- Adm. Michael Mullen, chairman of the U.S. Joint Chiefs of Staff

"The solution to future threats is not something that has a pilot in it."
--
Defense Secretary Bob Gates

Ever since I began writing the "Hey! Who's Flying This Thing!" column -- decades ago it seems -- "HWFTT" has focused on developments in the amazing world of flying model airplanes ... that kill.

But today we're going to flip that story 90 degrees, and take a turn for the vertical. You see, as fast and furious as unmanned, horizontal-flying aircraft have evolved, the big story in recent months has been the advances going on in robotic helicopters. Just a few days ago in fact, Army General Peter Chiarelli argued that within the next 25 years, U.S. Army aviation will go almost entirely robotic.

The Army has already put fixed-wing Ravens from AeroVironment (Nasdaq: AVAV) into wide deployment among its small-unit formations of course. But the big news over the next two-and-a-half decades will be the increased use of unmanned (or optionally manned) helicopters in low-altitude combat. Today, we're going to look at a few of the companies leading the way up -- straight up.

First up, United Tech
Quick: When you think U.S. Army aviation, what's the first bird that flies to mind?

That's right: United Technology's (UTC) (NYSE: UTX) Black Hawk -- of Black Hawk Down fame. A couple months back, we discussed UTC's billion-dollar project to remake the Black Hawk as a robotic aircraft, one capable of flying with or without a pilot. At a cost of just 113% the price of a base-level Black Hawk (no heated leather seats, no Bose stereo system or spoiler), UTC believes it can build a remote-controlled chopper capable of conducting rescue and supply operations in "hot zones," thereby eliminating the risk of Army airmen taking casualties on dangerous missions.

Batter up, Boeing
It's an attractive proposition, you must admit. So attractive, in fact, that Boeing (NYSE: BA) is gambling that it cannot miss. The aerospace giant, best-known for its fixed-wing offerings, has yet to land sizeable sales contracts for its new A160 Hummingbird. But believing that robotic choppers will eventually find a market, Boeing is reported to have started producing 21 new Hummingbird's before orders even materialize. The objective: Get ahead of the curve on anticipated demand when the robo-choppers become available for purchase and lease early next year.

UTC, Boeing … anyone else want to play this game?
As a matter of fact, yes. Within the field of robotic helicopters, UTC's the one grabbing headlines, and Boeing is building, but Northrop Grumman (NYSE: NOC) actually has its helicopters in service already. As I mentioned back in November, the U.S. Navy began putting Northrop's Fire Scout through its paces in the eastern Pacific last year, and says the bird's performing "wonderfully."

Earlier this year, Northrop began expanding the Fire Scout's theater of operations onshore as well. The company demonstrated the helicopter's ability to autonomously resupply ground troops at the Army's Expeditionary Warrior Experiment at Fort Benning. Similarly, Lockheed Martin (NYSE: LMT) and partners Kaman Aerospace and Honeywell (NYSE: HON) underwent an unmanned demo last month with their "K-Max" robo-copter, performing on location at the Army's Dugway Proving Ground in Utah.

Where's the shootin' end?
But perhaps bored at the prospect of building an aerial luggage packer, Lockheed's not stopping with the K-Max. Just days ago, the news came out that Lockheed has decided to partner with archrival Boeing's other archrival, European EADS, to build a shootin' chopper for the Army.

In cooperation with EADS' American Eurocopter (an oxymoron if ever I saw one), Lockheed is developing three AAS-72X helicopters on spec, hoping to prove to the Army that can build helicopters that fly, chew gum, and blow stuff up all at the same time. Based on Eurocopter's UH-72A Lakota design, which is replacing the Army's fleet of UH-1H Hueys built by Textron (NYSE: TXT), the Armed Aerial Scout should be operational late this year. At present, the AAS-72X appears designed for operation by human pilots (it's even advertised as offering a "large cabin for true multi-role capability"). But perhaps not forever ...

Execute a 360
... because now we come full circle. You see, the ultimate goal of the AAS program is to replace the Army's fleet of OH-58 Kiowa scout helicopters with a partly or wholly unmanned fleet; one that will perform not just the kind of resupply ops for which the K-Max copter was designed, but actual "reconnaissance and strike" missions. This argues in favor of Lockheed's AAS evolving into a truly robotic helicopter -- just as General Chiarelli promised.

Your Foolish investing takeaways
So, what does all this mean to you, the investor? Three things:

  • First, we're at the very beginning of a long-term, and lucrative, upgrade cycle in military hardware. Across the spectrum, from planes to tanks to helicopters, the military is just wild about robots.
  • Second, the defense contractors are moving to fill that need, to satisfy their customers' desires -- and as the upgraded sticker price on UTC's Black Hawk shows, they're adding in a tidy profit margin for the service.
  • Third and finally, here at the beginning of this lucrative upgrade cycle, defense stocks are -- literally across the board -- selling for extremely attractive multiples to earnings and free cash flow.

Now, I don't mean to beat a dead horse here, robotic or otherwise. But it seems to me, now's a great time to buy this trend.

Fool contributor Rich Smith owns shares of AeroVironment, which is also a Motley Fool Rule Breakers recommendation. Should that affect your decision to listen to his advice? Does he -- to be perfectly blunt -- have any clue what he's talking about? Don't be afraid to ask. Check out his record on Motley Fool CAPS and find out.

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