Lock Up Profits — in Prison Stocks: Analyst

Privatized prison stocks have seen a modest gain in the past three months, so is there room to run from here?

T.C. Robillard, analyst at Signal Hill, discussed his insights.

“You’ve seen prison populations pretty consistently over the last three decades move up a couple percent a year…and from a business model perspective, it’s clearly good news,” Robillard told CNBC.

Robillard has a “buy” rating on The Geo Group and a “hold” rating on Corrections Corporation of America.

“What you see in a recession is that states end up overcrowding their own prisons in an effort to save money,” he explained.

“And as budgets start to flatten out and improve, the first things you’re going to see them turn to is the private sector to help alleviate some of that overcrowding, because the states [still] will not have the funding necessary to build new prison beds.”

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Robillard has investment banking clients who own shares of CXW and GEO. In addition, Signal Hill makes a market in the securities of CXW and GEO.