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Big Brother Getting Bigger

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Regardless of how you feel about the war on terror, the amount of money being spent protecting the United States is more than it’s ever been. Homeland Security spending topped a staggering $200 billion between 2002 and 2006. Since the 9/11 attacks, the Transportation Security Administration has spent over $3 billion on explosive detection systems and the international biometics market has nearly tripled in the same period. As the country uses technology to fight terror, how can you tade this security sea change?

There’s no shortage of publicly-traded companies to get behind in this space. Guy Adami recommends L3 Communications (LLL), one of the biggest manufacturers of x-ray machines used in airports. And DRS Technologies (DRS), which makes thermal imaging devices and air combat training systems is another one to look into, he says. The company even has its own homeland security division.

Pete Najarian likes Titanium Metals (TIE), which supplies Boeing (BA) and other manufacturers of planes, satellites and tankers being used around the world. He also recommends Force Protection (FRPT), the maker of advanced military vehicles in line to replace the aging Humvee line. The biggest problem with FRPT, Pete says, is that it can’t keep up with the government orders.

Jeff Macke is going to the aerodefense space and recommending Alliant Techsystems (ATK). And don’t forget about cyber-terror. Cisco’s (CSCO) number one customer is the U.S. government, he says.

Eric Bolling is a buyer of Honeywell (HON), a conglomerate that makes turbines as well as instrumentation panels for Boeing aircraft.

One industry on the forefront of the security sea change is biometrics, the method to recognize humans using unique traits such as fingerprints or behavioral traits. Victor Lee, a senior consultant at the International Biometric Group, joins the guys to shed a little light on this lesser-known, but wildly growing business.

The biometrics space went from a $524 million industry in 2001 to projected global revenues of $3 billion this year, Victor says. Some expect revenues to grow to $7.4 billion by 2012.

Fingerprinting and retinal scanning, always popular in the movies, are actually beginning to penetrate our daily lives, he says. But even beyond that, biometrics companies are focused on developing vein pattern recognition – that is, the ability to identify someone by how their blood flows through their body. This has potential to be more effective than fingerprint scanning, Victor says, because it would make identity theft much more difficult.

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HON
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LLL
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TIE
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Trader disclosure: On June 26 2007, the day this episode was taped, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders Macke Owns (SWY); Najarian Owns (.VIX) Bolling Owns (BP), (T); Bolling Is Short S&P Futures; Bolling Is Short Nasdaq Futures CNBC Is A Service Of NBC Universal And Dow Jones