Among the biggest winners Wednesday morning are prison stocks Geo Group GEO and CoreCivic CXW, moving positively to the news that Donald Trump won the 2024 presidential election.
While prison stocks could benefit from Trump back in office and policies to expand private prison and immigration detention centers, past market history shows these stocks fell during Trump's previous four years in the White House.
What Happened: Investors could be feeling déjà vu with prison stocks moving higher after Trump's win Tuesday night.
Geo Group shares opened higher by 19.4% after Trump's win in the 2016 election and CoreCivic shares opened higher by 36.8%
Fast forward to 2024 and Geo Group shares are up 35% on Wednesday and CoreCivic shares are up 28%.
As investors look for sectors and stocks that could benefit from a Trump presidency, the fact that Trump already served four years in the White House could provide historical results on what could happen going forward.
Geo Group shares traded at $16.27 on Election Day 2016. They soared to $26.81 by Trump's inauguration date of Jan. 20, 2017. After that, it was quite the fall for the stock. It went to $9.79 on the day of the 2020 election and $9.01 on the 2021 inauguration date of Jan. 20 for President Joe Biden.
This marked a 39.8% decline from the 2016 election day to the 2020 election day and a 66.4% decline from Trump's inauguration to Biden's inauguration.
CoreCivic shares had a similar fate. The stock traded at $14.33 on Election Day 2016 and soared to $28.32 by Trump's inauguration. After that, the stock fell to $7.64 on the day of the 2020 election and $7.26 on Biden's inauguration.
This marked a 46.7% decline from the 2016 election day to the 2020 election day and a 74.4% decline from Trump's inauguration to Biden's inauguration.
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Why It's Important: Geo Group and CoreCivic own and operate correctional, detention and residential reentry centers across the country.
The companies saw their stock rise after the first presidential debate between Trump and Biden earlier this year. Immigration remains an urgent topic among the candidates and the electorate nationwide.
Prison stocks have attracted interest from Citron Research's Andrew Left and "Big Short" investor Michael Burry in the past. Investors who normally short stocks see value in the private prison sector and potentially a Trump win.
Based on the results above from Trump's past time in the White House, investors in GEO and CXW stock might want to consider taking profits now or selling around Trump's inauguration in January.
While the stocks could go up more during Trump's next four years in office, there is potential that the gains are already priced in or the same fate could happen from Trump's last time in the White House.
Investors could get an early look at what the company's see happening under a Trump presidency with CoreCivic reporting third-quarter financial results Wednesday after market close and Geo Group reporting Thursday before market open.
Analysts expect CoreCivic to report third-quarter revenue of $469.8 million, down from $483.7 million in last year's third quarter, according to data from Benzinga Pro. The company has beaten analyst estimates for revenue in four straight quarters and six of the last eight quarters overall.
Analysts expect Geo Group to report third-quarter revenue of $613.3 million. That’s up from $602.8 million in last year's third quarter. The company missed second-quarter revenue estimates from analysts, but has beaten analyst estimates in eight of the last nine quarters.
Aramark ARMK is another prison-related stock to watch during Trump's return to office. It’s a company that provides food, training and jobs to people in correctional facilities.
Aramark stock did not fall as drastically during Trump's time in office. The stock currently trades higher than it did when Trump was in office.
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