MURDER, POLITICS, AND THE END OF THE JAZZ AGE
by Michael Wolraich
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Corrections Corp. of America's Bright Prospects - Barrons.com:
By EmmaZahn on Mon, 06/25/2012 - 8:16pm |Investors haven't warmed up to Corrections Corp. of America. But they should, especially if it becomes a real-estate investment trust.
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Corrections Corp. of America isn't exactly in a warm and fuzzy business.
In fact, it's a private company that, in return for a fee, houses federal, state, and local criminals—some 80,000 in all of its facilities in 20 states and the District of Columbia. The company's self-described "correctional system" is bigger than that of 47 states and all 24 Immigration and Customs Enforcement facilities combined.
The Nashville-based outfit is no favorite of civil libertarians. Many find incarceration for profit, rather than rehabilitation, repugnant. But the company, founded just 30 years ago in the Reagan administration heyday of privatization of government functions, is winning favor with investors. That's because of its growth potential and likely plan to convert itself into a real-estate investment trust with the ability to save on taxes at the corporate level and shower rich dividends on income- hungry shareholders.
CURRENTLY TRADING BELOW $27, its stock (ticker: CXW) could hit $49 to $54 a share if the company were to convert to REIT status, according to a base-case scenario sketched out in a report filed on a value-investor Website (www.valueinvestorsclub.com).Even without such a conversion, the report estimates that the stock's fair value ranges from $32 to $42.
URL:
http://online.barrons.com/article/SB50001424053111903882904577477001345171564.html
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