The world we’re living in is not as safe as it used to be. That’s why investing in aerospace exchange traded funds (ETFs) might be an appealing idea for investors who believe that what the U.S. spends to defend itself from attacks may stay elevated.

Marc Lichtenfeld for Investment U researched  companies with innovative, leading products that help keep Americans safe and found three companies of note. [Aerospace & Defense ETFs: Why the Industry is Feeling Bullish.]

  • Esterline (NYSE: ESL) produces various defense and industrial products, including radar counter-measure decoys and other anti-missile and torpedo decoys. The stock trades at a little above its book value and below 14 times expected earnings.
  • Force Protection (NASDAQ: FRPT) manufacturers bulletproof and blast-resistant vehicles. The company has $122 million on hand, no debt and earnings are expected to grow 20% per yer over the next five years.
  • Global Defense Technology & Systems (NASDAQ: GTEC) provides counter-terrorism and intelligence data and analysis. The company also provides water purification and other support systems for troops. GTEC has a projected five-year growth rate of 17.5%.

The wars in Afghanistan and Iraq could alter the defense spending picture as they wind down and pullouts begin. They’re budgeted to cost $159 billion in fiscal 2011, which begins in October, reports David R. Francis for the Christian Science Monitor. That figure is down slightly from 2010. From 2012 to 2015, the cost is expected to be in the neighborhood of $50 billion a year. But don’t take that to the bank; the actual dollar amount will be determined by many things, including a variety of uncertainties.

President Barack Obama’s budget has more money going to the Pentagon in the next eight years than any other administration since World War II.

For more information on aerospace and defense, visit our aerospace & defense category.

  • PowerShares Aerospace and Defense (NYSEArca: PPA): ESL and FRPT both have weightings under 1%

  • iShares Dow Jones U.S. Aerospace & Defense (NYSEArca: ITA): ESL is 2.1% and FRPT is 1.2%.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.