Dj Geo Group Inc, Inst Holders, 3Q 2024 (Geo)

For Immediate Release

Chicago, IL – November 22, 2024 – Today, Zacks Investment Ideas feature highlights Oklo OKLO, Coinbase Global COIN, Tesla TSLA, GEO Group GEO and Energy Select Sector SPDR ETF XLE.

Trump Election Victory: 5 Stocks to Benefit Most

Presidential Impact on Stocks

Earlier this month, former President Donald Trump defeated Vice President Kamala Harris to become the president-elect. As I have discussed in previous commentaries, the data suggests that U.S. presidents have little impact on the overarching market for two reasons:

1. The U.S. Economy Is Massive: Though presidents wield the most power in the U.S., the economy is akin to a giant tanker – its immense size and complex interconnectedness make it challenging to switch directions on a dime.

2. Split Government: Over the past few decades, the governmental branches have been split more often than not. The inherent checks and balances thought up by the founding fathers can make it difficult to get an agenda through quickly.

Presidential Impact on Equities: Why This Time Is Different

While the above points are accurate more often than not, President Trump’s second term is likely to be impactful. Because Republicans swept all three branches of government, Trump and his allies will be able to pass their agenda easier than the norm. Though the macroeconomic impact may take a few years to be realized, the Trump win will significantly impact on individual stocks. Below are five stocks that benefit the most from the Trump victory:

1. Oklo

Oklo develops advanced nuclear reactors that provide the clean and efficient power necessary to power AI data centers. The company enjoys a leg up versus the competition because OpenAI CEO Sam Altman serves as the chairman. As if that wasn’t enough, Oklo will now enjoy political power and influence after the Trump transition team tapped Oklo board member Chris Wright to head the Department of Energy (DOE). Though the U.S. is behind in the nuclear race, the appointment clearly signals that the Trump administration will push nuclear ambitions to fuel the artificial intelligence boom.

2. Coinbase Global

Coinbase, the leading U.S. crypto exchange, has been one of the best performing stocks over the past year. However, the stock performance is even more impressive when investors consider the fact that the current political regime has been a thorn in the company’s side. For example, the Securities and Exchange Commission (SEC) sued Coinbase after alleging that it is operating an “unregistered” exchange.

However, Coinbase received some welcome news when then-candidate Trump announced to a cheering crowd at a Bitcoin conference that he intends to fire SEC Chair Gary Gensler on day one of his presidency. Meanwhile, Coinbase CEO Brian Armstrong is already making inroads with the new administration and is expected to meet with Trump and his team to advise them on crypto policy.

3. Tesla

Few people have grown closer to President-elect Donald Trump than Tesla CEO Elon Musk. Musk has essentially bet the company’s future on autonomous driving and robotaxis. Earlier this week,the Trump team promised to cut back regulations on autonomous driving. The news is huge for Tesla because strict regulations have prevented Tesla from rolling out its delayed (and highly anticipated) robotaxis. Further, Sean Duffy, who Trump named for his pick for Secretary of Transportation, is another bullish signal for the stock. In 2018 remarks, Duffy said that AV “technology can be remarkable in keeping our families and kids safe.”

4. GEO Group

GEO spiked 42% on the day after the election –for good reason. The company operates private prisons, mental health facilities, and immigration detention centers. Of course, one of Trump’s primary campaign promises is to clean up the U.S. immigration system and deport illegal entrants into the country. With the pick of Tom Homan for “Border Czar,” Trump is following through on his promise. Homan, the former Acting Director of Immigration and Customs Enforcement (ICE), is an immigration hawk.

5. Energy Select Sector SPDR ETF

Another core promise of the Trump administration is to “unleash American energy” and “drill, baby drill.” Trump plans to deregulate environmental regulations to help U.S. energy producers unlock the country’s natural resources.

Conclusion

The resounding Trump election victory and the Republican “mandate” will dramatically impact stocks like GEO Group, Coinbase, and Tesla.

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President-elect Donald Trump seemingly agreed that military resources will be used to deport undocumented immigrants.

What Happened: Trump's confirmation came via a repost on social media. Conservative activist Tom Fitton claimed the incoming administration will deploy military assets for a mass deportation program.

Trump's responded with the caption: "TRUE!!!"

The statement aligns with earlier plans sketched out by Trump’s nativist advisors, including Stephen Miller and Tom Homan.

Miller and Homan, Trump’s border czar and former acting director of the U.S. Immigration and Customs Enforcement, devised the deterrence program to separate thousands of immigrant families.

See Also: Could Trump’s Housing Plans Reshape The Real Estate Market?

Why It Matters: Miller, Trump’s deputy chief of staff, previously proposed using military funds to construct large-scale holding facilities for immigrants.

On Nov. 7, the day Trump’s re-election was confirmed, stock opportunists pounced. The share prices of major prison stocks — Geo Group and CoreCivic — spiked.

Geo and CoreCivic both closed in the red Monday, down 0.83% and 1.03%, respectively.

Trump’s critics warn his deportation plans will likely lead to families being broken up and force taxpayers to shoulder the billions it will cost to fund such an initiative.

The use of military resources in immigration enforcement is not without precedent internationally. Several countries have turned to their armed forces to manage immigration challenges, often citing national security concerns:

• The Australian government employed its military under the direction of former Australian Prime Minister Tony Abbott’s 2013 "Operation Sovereign Borders” campaign. The military's role included detaining migrants in offshore facilities — a practice widely criticized by human rights organizations for alleged abuses and inhumane conditions.
• Italy’s navy continues to intercept migrant ships. Last week, it opened detention centers in Albania to process thousands of asylum-seekers outside its borders. The plan does not call for families to be separated, according to the Associated Press.
• India has stationed military units along its borders with Bangladesh and Myanmar, citing the need to curb illegal immigration. The military operations led to the controversial expulsion of Rohingya refugees fleeing persecution in Myanmar. This drew condemnation from international bodies such as the United Nations.
• As a key entry point for migrants entering Europe, Greece has used its military to assist in patrolling borders and managing overcrowded refugee camps on islands like Lesbos. The military's involvement has been criticized for heavy-handed and harsh tactics.

What’s Next: Trump's rhetoric creates a precedent that raises questions about the balance between national security and civil liberties.

In the lead-up to Election Day, the twice-impeached former president often made graphic criticisms of migrants. Many of his claims, linking them to crime and violence, were unsubstantiated.

A KFF poll showed 80% of Americans encountered false claims about migrants increasing crime, reflecting Trump’s fearmongering strategy.

The announcement comes as Trump continues to fill key cabinet positions, with some nominees facing scrutiny over qualifications and conduct.

Now Read:

• Gaetz Nomination In Peril Due To GOP Resistance

Photo: Pixabay

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

As Donald Trump prepares to be sworn in as the 47th president of the United States on Jan. 20, 2025, his administration has signaled an uncompromising approach to immigration, appointing former Immigration and Customs Enforcement (ICE) head Tom Homan as his “border czar.” Trump’s election victory and the appointment of Homan, who pledged earlier this year that he would lead the “biggest deportation force this country had ever seen” under Trump’s return to leadership, ignited a rally in private prison stocks The GEO Group, Inc. and CoreCivic, Inc. .

These companies, which manage detention and rehabilitation centers, are positioned to capitalize on a potential surge in contracts with federal agencies focused on immigration enforcement. Isaac Boltansky, an analyst at BTIG, said in a Nov. 6 note to clients, that a second Trump administration would likely expand contracts with the U.S. Marshals Service and the Federal Bureau of Prisons.

More importantly, Boltansky pointed out that President-elect Trump’s “far more aggressive stance on border enforcement” would directly boost the ICE operations at both GEO Group and CoreCivic. With the U.S. bracing for more hawkish immigration policies, both GEO and CXW appear well-equipped to benefit. But which of these two stocks is a better buy now? Let's take a closer look to find out.

The Case for GEO Group Stock

Florida-based The GEO Group, Inc. is a leading global provider of government services, specializing in the design, financing, development, and management of secure facilities, processing centers, and community reentry centers. With a broad range of services, including rehabilitation and post-release support, secure transportation, electronic monitoring, and correctional health care, GEO is a leading federal contractor.

The company operates 99 facilities with approximately 80,000 beds, including active, idle, and development projects, and employs nearly 18,000 people worldwide. Valued at $3.6 billion by market cap, shares of GEO Group have rallied a stunning 172% over the past year and 141% on a YTD basis, easily dwarfing the broader S&P 500 Index’s returns.

Along with attracting massive investor attention, GEO Group has also seen insider trading activity this year. In August, Executive Chairman George C. Zoley made a noteworthy purchase of 250,000 shares at an average price of $12.28 per share, amounting to approximately $3.07 million. This acquisition raised Zoley’s stake in the company to almost 3%, underscoring his strong confidence in GEO’s long-term prospects.

After the company reported its Q3 earnings results on Nov. 7, which fell short of Wall Street’s estimates, shares of GEO Group skyrocketed 13.6% on the very same day, driven by the renewed optimism surrounding Trump’s vow to implement the largest mass deportation of undocumented immigrants in U.S. history. The company’s total revenue of $603.1 million improved slightly from the year-ago quarter, while adjusted EPS of $0.21 marked a solid 10.5% annual jump.

While CEO George C. Zoley acknowledged that the company’s Q3 results fell short of expectations, largely due to lower-than-expected revenues from its Electronic Monitoring and Supervision Services segment, he highlighted several potential growth opportunities across GEO’s diverse services platform, including the activation of 18,000 available beds in contracted and idle secure facilities, which could significantly boost the company’s financial performance.

Furthermore, despite the suspension of GEO’s dividend in 2021, Zoley’s comments in the Q3 earnings release about evaluating options to “return capital to shareholders in the future” have sparked speculation among investors that GEO Group may reinstate its dividend as it works to reduce debt and deleverage its balance sheet. By the close of Q3, GEO Group reported a net debt of approximately $1.7 billion alongside a solid cash position of around $71 million and total available liquidity of approximately $280 million, reflecting a stable financial foundation as it navigates its ongoing growth and capital management strategies.

Another major growth catalyst for the company came on Oct. 4, when ICE strengthened its partnership with GEO by exercising the first five-year option to extend the contract for the GEO-owned 1,940-bed Adelanto ICE Processing Center in California through Dec. 19, 2029.

The Adelanto Center, which provides secure housing and support care services, employs approximately 350 people. This continued collaboration solidifies GEO’s position as a key player in the nation's immigration enforcement infrastructure.

Looking forward to fiscal 2024, management anticipates total revenue to hit $2.42 billion, while adjusted EPS is forecasted to land between $0.80 and $0.84. Also, adjusted EBITDA for the entire year is projected to range between $470 million and $480 million.

While coverage is light, Wall Street appears optimistic about GEO stock, with a consensus “Moderate Buy” rating overall. Of the three analysts offering recommendations, two advise a “Strong Buy,” and one suggests a “Hold.”

The average analyst price target of $32.33 indicates a 23.8% potential upside from the current price levels.

The Case for CoreCivic Stock

Tennessee-based CoreCivic, Inc. is a leading diversified government solutions provider, offering services that include corrections and detention management, residential and non-residential alternatives to incarceration, and real estate solutions.

As one of the nation's largest owners of partnership correctional, detention, and residential reentry facilities, and one of the biggest prison operators in the U.S., CoreCivic has been a reliable and adaptable partner to government agencies for over 40 years. With a market cap of around $2.37 billion, shares of this private prison stock have outperformed the broader market, delivering gains of 54% over the past year and 47.5% on a YTD basis.

Following the company’s Q3 earnings results on Nov. 6, which smashed Wall Street’s estimates, shares of CoreCivic surged 25.6% in the subsequent trading session. The company reported total revenue of $491.6 million, up 2% year-over-year, and comfortably soared beyond Wall Street’s forecast of $469.8 million.

On an adjusted basis, the company’s normalized funds from operations (FFO) of $0.43 per share demonstrated an impressive 22.9% annual growth and topped estimates by a notable 34.4% margin. CoreCivic's balance sheet remains robust, with a net debt to adjusted EBITDA ratio of 2.2x, below the management target leverage range of 2.25x to 2.75x.

However, during the quarter, CoreCivic experienced a 3.4% drop in revenue from its largest government partner, ICE, compared to the same period last year. This drop was primarily due to the termination of its ICE contract at the South Texas Family Residential Facility in August 2024.

CoreCivic’s robust capital strategy includes a substantial share repurchase program. In 2024 alone, the company bought back shares worth $59.5 million. Since the program's inception in May 2022, CoreCivic invested almost $172.1 million in repurchases. With $177.9 million still left under the program as of September 30, CoreCivic remains poised to return capital to shareholders while maintaining a strong balance sheet.

For fiscal 2024, management has raised its guidance, now forecasting normalized FFO to range between $1.59 per share and $1.65 per share, an improvement from the prior range of $1.48 to $1.56 per share. Additionally, adjusted EBITDA is expected to arrive between $317 million and $321 million, surpassing the previous outlook of $302.4 million to $308.4 million, signaling strong performance ahead.

Overall, the mood on Wall Street is optimistic for CXW, with a consensus of “Moderate Buy.” Of the three analysts covering the stock, one advises a “Strong Buy,” and the remaining two recommend a “Hold.”

The average analyst price target of $25.33 indicates 18.2% potential upside from the current price levels.

GEO vs. CXW: Which Stock is a Better Buy?

Overall, both GEO Group and CoreCivic are well-positioned to benefit from the increased focus on immigration under a second Trump administration, but GEO Group stands out as the more attractive option. While both stocks have surged following their latest earnings reports, GEO's growth potential appears stronger. The company’s ability to expand ICE contracts and its diversified services give it a solid growth trajectory moving forward.

Additionally, GEO Group also benefits from notable insider buying, with Executive Chairman George Zoley’s purchase signaling strong confidence in the company’s future. In comparison, CoreCivic’s growth prospects are somewhat tempered by a decline in revenue from its largest government partner, ICE, and the termination of a major contract. While CoreCivic’s financials remain strong, GEO’s broader opportunities and potential dividend reinstatement could make it a more compelling choice for investors at the present moment.

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On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.