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  • Writer's pictureIshfaaq Peerally

GEO Group Stock Analysis

Real Estate Investment Trusts REITs $USRT have been doing pretty well in recent years except for private prisons REITs. Private Prisons are controversial and the market $SPX500 currently doesn't like them. There are two main private prison companies, GEO Group $GEO and CoreCivic $CXW .

๐™๐™๐™š๐™ง๐™š ๐™ž๐™จ ๐™– ๐™—๐™ž๐™œ ๐™ฅ๐™ง๐™ค๐™—๐™ก๐™š๐™ข ๐™ค๐™› ๐™ค๐™ซ๐™š๐™ง-๐™ž๐™ฃ๐™˜๐™–๐™ง๐™˜๐™š๐™ง๐™–๐™ฉ๐™ž๐™ค๐™ฃ ๐™ž๐™ฃ ๐™ฉ๐™๐™š ๐™๐™Ž ๐™–๐™ฃ๐™™ ๐™ข๐™–๐™ฃ๐™ฎ ๐™ฅ๐™š๐™ค๐™ฅ๐™ก๐™š ๐™—๐™ก๐™–๐™ข๐™š ๐™ฅ๐™ง๐™ž๐™ซ๐™–๐™ฉ๐™š ๐™ฅ๐™ง๐™ž๐™จ๐™ค๐™ฃ๐™จ. They have a role to play, but they are not the only ones at fault. The government is to be blamed too. The Biden Administration is not a fan of private prisons and earlier this year, President Joe Biden issued an executive order banning the Department of Justice (DOJ) from renewing their contracts with private prisons. GEO Group will face other issues in refinancing their loans as many banks such as JPMorgan Chase $JPM no longer loan to private prisons.

This directly affects the business of GEO as 28% of their revenues comes directly from the DOJ through the Bureau of Prisons (BOP) and the US Marshalls. Prisons, however, are always going to be here.

However, now, the largest revenue segment is not the DOJ but ICE (Immigration and Customs Enforcement) as the Border Crisis intensifies. I believe that in the coming years, the revenues and profits are going to be stable.

GEO Group is undervalued today as the market overreacted but I won't say that this is a stock for the long-term. Rather, ๐™ž๐™ฉ ๐™ž๐™จ ๐™– ๐™˜๐™ž๐™œ๐™–๐™ง ๐™—๐™ช๐™ฉ๐™ฉ ๐™จ๐™ฉ๐™ค๐™˜๐™ . The company has a moat with good fundamentals.

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