As hard as it is to believe, we’re just weeks away from a new year – and a new administration.
Now last month, I showed you why this is great news for three specific sectors.
But there’s one more that we didn’t talk about…
Since Trump’s victory, this industry has done a complete 180, gaining over $1 billion in new market value.
Now, one of the financial news pundits has been claiming recently that this is merely investors’ overreaction to the election results and that this rally won’t last.
I couldn’t disagree more. In fact, this is one of the best bets you can make in 2017.
This Private Prison Stock Will Prove To Be The Biggest Winner Of The Election
For at least the past eight years, the federal government has been trying to move away from the privatization of prisons. But as I’m sure you well aware of by now, President-Elect Trump believes the private prison process works better. This has led to mass speculation that there will be in increase in the privatization of this criminal justice process.
Now before Trump’s victory, prison stocks had been taking a beating, especially back in August when the Justice Department announced that it will end its use of privat prisons. They cited that they’re less safe and less effective, which only further helped prison stocks in posting their worst quarters in over 15 years.
But with with Trump’s win, this plan seems to be less and less viable. And these private prison companies also have contracts with U.S. Immigration and Customs Enforcement (ICE), which probably won’t end any time soon.
So prison stocks couldn’t be happier…
In fact, private prison stocks skyrocketed on Wednesday, November 9, following the election results, with The GEO Group, Inc. (NYSE: GEO) and CoreCivic, Inc. (formerly Corrections Corporation of America, (NYSE: CXW), posting 43% and 21% gains, respectively.
Clearly, both of these stocks won with Trump. But GEO happens to be a publicly traded company that contributed significantly to some of the Super PAC’s that supported Trump. And as you can see from its post-election gains, it stands to make the most over Trump’s term.
Here’s a look at the Fibonacci levels for GEO:
The range shown above is for the past 150 trading days. This chart assesses the closing highs to the closing lows and then plots the retracement levels. As you can see, GEO
blew up past all the traditional fibonacci retracement levels. And should this momentum continue, we could see GEO
make a 100% retracement up to the $35 price level.
Here’s another view of the stock since August 24th. The three typical fibonacci retracement levels (38.2%, 50.0%, and 61.8%) are drawn in for you. But also take into account the gap higher not just after Election Day, but also after it posted earning, which beat earnings per share(eps) expectations ($0.96 eps versus estimates of $0.75 eps).
You’ll also notice above that a full gap retracement would coincide with the fibonacci retracement level of 61.8%. But really, you can use any of these retracement levels to anticipate a bounce higher, and then make any type of bullish trade (like a call option, a bull call spread, or going long the stock).
If you do go long the stock, I encourage you to consider using either a close below the low of the breakout day or a fibonacci retracement level as your protective stop.
Bottom line is… when you look at the data itself, it’s pretty clear that you’ve got a lucrative year ahead of you when it comes to prison stocks – no matter what the financial news pundits say.
Have a great weekend – and good trading,
P.S. I didn’t quite tell you everything when I said prison stocks are the best bet you can make for 2017. It’s actually the second best bet you can make… Here’s the best bet you can make.