New Trade for December 1st, 2023

Stocks finished off a record November on Thursday and snapped a three-month losing streak. The S&P and Nasdaq rallied 8.9% and 10.7%, respectively, to log their best monthly performances since July 2022. The Dow surged 8.8% for its best month since October 2022.

Amidst this backdrop, technology stocks have emerged as the standout performers of November. However, as the month winds down, we’re seeing a shift in investor focus. While tech leads the charge, there’s an under-the-radar name that’s quietly gaining traction, one that’s intricately linked to a pressing global issue.

Apprehensions of migrants at the southern U.S. border surpassed 2.3 million in FY2022 (a record high), and that number is expected to continue to climb in the coming years. While this is not great news for U.S. taxpayers, there is a publicly-traded company that stands to benefit as the migrant crisis escalates.

Analysts are just starting to catch onto this cheap stock, with Citron Research recently releasing a bullish report on the company, starting with: “Which company with a P/E of 12 holds the key to one of the most impactful solutions for the migrant crisis?” 

The answer… 

The GEO Group: A Potential Value Play Amid Market Uncertainties

As we near the end of 2023, The GEO Group (GEO) continues to draw attention in the investment community. Despite a challenging year with the stock sliding over 10%, there are compelling reasons to consider GEO as a potential value play.

Solid Real Estate Value and BI Segment’s Potential

GEO’s owned real estate is estimated to be worth significantly more than the current enterprise value in private market transactions. Additionally, the BI (Business Intelligence) segment could be worth the entire enterprise value if spun off or sold. This segment alone generated over $270 million in EBITDA in 2022, highlighting its profitability.

Impressive Margins and Analysts’ Optimism

The company boasts impressive EBITDA margins of 55%. With a current market cap of approximately $1.28 billion and a share price of $10.15, GEO’s financials remain robust. Analysts, including those from Citron Research, view GEO as undervalued, with a median 12-month target of $15, representing a potential 43% increase from the current price.

Recent Developments and Future Prospects

Recent tweets from Citron Research highlight the unique position of GEO in the homeland security sector, especially with its technology being the only congressional-approved solution for tracking migrants. Additionally, the adoption of an Alternative to Detention model for migrants in Australia further strengthens the bull case for GEO.

Looking Ahead

As we move into 2024, The GEO Group’s position in the market, coupled with its solid real estate value and the potential of its BI segment, make it a stock worth watching. Investors should consider the company’s strong fundamentals and the growing relevance of its services in the current geopolitical climate.

[stock_market_widget type=”accordion” template=”extended” color=”#5679FF” assets=”GEO” start_expanded=”true” api=”yf”]