Prison industrial complex stock market

You are using an outdated browser. Upgrade your browser today or install Google Chrome Frame to better experience this site. Over the past several years, one of the best investments has been in shares of prison owners and operators.

CorpWatch : The Prison Industrial Complex: Crisis and Control

CXW and Geo Group NYSE: Both stocks have provided investors with exceptional long-term returns. In , both of these companies converted their businesses into real estate investment trusts for tax purposes.

This added substantial value to these companies and the stocks began to spike, and an intermediate top was put in towards the beginning of Since then, the stocks have corrected about 20 percent and it looks attractive again.

There are several fundamental reasons to like these companies as long-term investments. First, there is a secular trend towards privatization in the prison system.

According to Corrections Corp. That figure exceeds 10 percent today. As private companies, Corrections Corp.

Governments in the U. Second, the prison industry is recession-proof. Furthermore, private prison operators may benefit from a weak economy.

CoreCivic, Inc. (CXW) Institutional Ownership & Holdings - kysiqubonypun.web.fc2.com

Given these points, it seems that prison stocks are compelling. This becomes clearer when we consider that these companies are selling at attractive valuations.

Unlike most stocks, it is trading near 52 week lows, although it seems to have put bottoms in. While they trade at somewhat high prices relative to net earnings nearly times for a real estate investment, trust a more appropriate measure is funds from operations FFO.

2 Prison Stocks That Look Good: Corrections Corp, Geo Group

Both companies, having converted into real estate investment trusts, now pay substantial dividends. This distribution policy ensures that these companies satisfy the conditions to quality for real estate investment trust tax treatment. This means that the income distributed to the shareholders is taxed as ordinary income, although it is not subjected to the corporate tax in other words, it is not doubly taxed like dividends coming from normal publicly traded companies.

It also means that these are excellent stocks for retirees who live off of dividend income. It also has the tailwind of positive secular trends, and it is recession resistant.

This last point is crucial for someone who is dependent upon consistent income, which can be jeopardized during a recession.

Regarding which company to buy, the Geo Group is a little less expensive, but Corrections Corp. The Geo Group also has about 15 percent of its operations overseas, primarily in Australia.

Private Prison Stocks Plummet But the Prison Industrial Complex Isn't Going Anywhere | kysiqubonypun.web.fc2.com

Given that the differences are minor, and given that they have both been excellent performers in the long run, it seems pointless to take the time to construct a prima facie case for one over the other, and interested investors should simply buy some of each. Ben Kramer-Miller has no position in Corrections Corp. Corrections Corp, Geo Group Ben Kramer-Miller More Articles April 07, CXW , prisons , real estate , stocks , taxes , trusts.

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