One of the biggest agenda items for 2009 is to wind down the number of troops in Iraq and Afghanistan as promised by Obama in his campaign. However gradual the troop withdrawal might be, it is my opinion that as personnel are pulled out, more unmanned aircraft will be deployed as a way to add another layer of effective military capability to offset the loss of ground troops.

It is my view that the Pentagon will increase budgets for unmanned aircraft as a way to keep a strong presence from above, keeping soldiers and pilots out of harm's way. After such a contentious war in Iraq, voters want sharp reductions in headcount, but they also want a military that is smart and utilizes more high technology to do the fighting.

Enter AeroVironment Inc. (AVAV).

Building on a history of technological innovation, AVAV designs, develops, produces and supports an advanced portfolio of unmanned aircraft systems (UAS) and efficient electric energy systems. The company's small UAS are used extensively by agencies of the U.S. Department of Defense and increasingly by allied military services to provide situational awareness to tactical operating units through reliable, real-time, airborne reconnaissance, surveillance and target acquisition.

AeroVironment recently confirmed its 2009 outlook, forecasting 25% top-line growth over 2008, with backlog increasing 31% in the current quarter. Shares of AVAV hit an all-time high of $38.68 in early November, showing just what kind of bullish relative strength the stock enjoys. Take a shot on this high flyer!

Trading Strategy:  Buy the AVAV March 35 Calls (VQSCG) at market