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A Foolish Take: The Most Durable Trump Bump

By John Maxfield - Apr 17, 2017 at 4:07PM

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One sector of the stock market has benefited immensely from the Trump presidency.

Stocks in multiple industries have shot up since Donald Trump won the presidential election on a pro-business agenda focused on corporate tax cuts and deregulation. Bank stocks have emerged as major beneficiaries, as have shares of for-profit education companies. Yet there's one sector that's benefited more than most: private prison stocks.

CoreCivic (CXW 0.50%) serves as a case in point. It's the largest operator of private prisons in the United States, owning or controlling 49 correctional and detention facilities and 25 residential reentry facilities, and managing an additional 11 government-owned correctional and detention facilities.

Since the beginning of November, shares of CoreCivic have gained 136%. And it isn't alone. The Geo Group (GEO 0.00%), another leading private prison operator, has seen its stock soar 103% over this same stretch. The S&P 500 is up only 10% since the election.

A bar chart showing the gain in private prison stocks vs. the S&P 500.

Data source: Chart by author.

Stocks in other sectors have begun to give back some of their post-election gains as the challenge of getting Trump's campaign promises through Congress sinks in. In contrast, shares of private prisons have continued to be buoyed by the Justice Department's vow to crack down on crime and reduce federal oversight of state and local law enforcement agencies.

Attorney General Jeff Sessions said in February, "If we take the right actions now, affirm good, effective, proven law enforcement techniques, we can avoid another surge in crime rates in America."

As the market's response to Trump's victory has shown, this is music to the ears of shareholders in CoreCivic and The Geo Group.

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Stocks Mentioned

The GEO Group, Inc. Stock Quote
The GEO Group, Inc.
$7.00 (0.00%) $0.00
CoreCivic, Inc. Stock Quote
CoreCivic, Inc.
$12.16 (0.50%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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