Go to Jails for Your Investments -- Barron's

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Includes: CRN, CXW, GEO
by: Susan Lerner


The market may have robbed prison companies like GEO Group, Corrections Corp. of America and Cornell Co. after a US Census report said the prison population was growing at an annual rate of 4% rather than the 13% predicted by the Pew Charitable Trusts earlier this year, but Barron's says opportunities exist if you go directly to jail to make your investments. Barron's reckons that the Pew Data, which forecasts the number of prisoners will rise by 192,000 to 2M by 2011, are more accurate than the Census figures, as actual 2006 numbers released by the Justice Department already were higher than the Census prediction. Therefore, Barron's says the lofty valuations of these companies are reasonable. With earnings growing at an annual pace of 20%, Barron's says Corrections Corp. shares could jump to $30 from their current $27; GEO could rise to $35 from $28.50 as earnings rise more than 25%; and Cornell with an earnings rebound to an estimated $1.27/sh. next year from $0.82 this year could shoot up 40% from the current $26.

Sources: Barron's
Commentary: Four Prison Stocks Worth Locking Up in Your Portfolio
Stocks/ETFs to watch: CXW, CRN, GEO. Related: OTCPK:CITY

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