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6 pts

Opinion on  Corrections Corp. of America New (CXW)     Sector: Services  >  Industry: Business Services
Prisoners are America's new Cheap Labor

Mar 29, 2008 07:39 PM GMT
Dcgicon
Return Risk
-4.38% MID
Sr. Analyst

Favorable/Unfavorable Valuation  

American prisoners will be considered an important part of the new manufacturing economy we have seen discussed in teh news.

On a global scale it is clear that wages are the primary drain on operating profits for any business. The new prison profiteers will provide labor at lower costs than thought possible and the expansion of this infrastructure will create an inherent boom. The spread between prison wages and the minimum wage will be a major issue in the following years, and a major source of protected profit.


CXW:  This call was made on 03/29/08 @ $27.21
Rating:   Positive   $27.21 (03/29/08)
Gain/Loss:   -7.98% in 617 days
Target:   $60.00 (+120.51%) in > one year


Comments (1)

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Thomas George    9 %     1 point   commented 616 days ago reply

Risk is of two types-systemic risk and stock specific risk.With commodity bull markets we typically see a rise in crimes,so we can expect better "business" for CXW in the coming years.You can grab a CDO but you certainly can make off with the copper wiring.We will see more news items like these going forward

http://www.bloomberg.com/apps/news?pid=20601109&sid=ag60bdimQ...

But the stock is not cheap as of now pe 25.57 as against an industrype of 16.95 and peg of 1.41 to industry 1.35.
Add to this there is the systemic risk faced by all US stocks.
bottomline-i agree with your logic but i think there is a risk you are too early.Another problem is see is this

http://biz.yahoo.com/ap/080324/private_prisons_sector_snap.ht...

recent positive news flow-a big negative as far as I am concerned.
And yes I am contrarian.

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