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Correctional Services (CSCQ) Message Board

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  • investorgroup investorgroup Jan 14, 2000 11:59 PM Flag

    If Crants...

    prison sector has been down for the past 12-24
    months is about 90% related to the WallStreet problems
    from PZN. PZN's going into/out of REIT, etc. has taken
    everyone's eye off the ball as to why they invested in this
    industry to start with (i.e. strong fundamentals with very
    visable earnings growth of 20+% for many years, etc.).
    The other 10% has been from bad press, which although
    there are escapes in public prisons too, you only seem
    to hear about the ones from a private
    facility.

    I own, and have for along time, almost all the
    private corrections stocks. We have a nice oppurtunity
    now with everyone flying into Tech (although that's a
    good place to be, but someday that bubble will burst),
    and they've let this sector get beaten down way below
    where they should be.

    IMHO, the ranking of the
    best stocks to own are the following:

    #1 --
    CRN: CRN looks to have the best all around management
    team in the business. They have a very sharp business,
    financial and operational team, and alot of talent in the
    field. They also cover a broader span of revenues
    through their 3 divisions (prisons, halfway houses and
    juveniles). CRN is just about the only one that has given
    extremely strong EPS growth without any surprise charges
    ever year or so. CRN is also the only one who owns a
    large portfolio of real estate, but they need to sell
    it to get rid of some of their debt (I think they
    are/have been working on this).

    #2 -- WHC: WHC has
    a large market share being the #2 in the business,
    and seems to have alot of resources in their parent
    company (WAK). They have a strong international presence.
    The main complaint with WHC is that they seem to
    low-ball new projects, which the #2 player shouldn't be
    doing, and while they have some very talented people,
    some (not all by any means) of their top exec's are
    not preceived to be that strong.

    #3 -- CSCQ:
    They also have a broad revenue stream and have been
    beaten down like the rest. However, these guys always
    seem to come up with a "one-time" charge every year or
    two, and their top exec's don't have a good reputation
    in many circles. However, they do have alot of
    contracts...they just need to put more power into the field
    personnel to improve programs,etc.

    #4 -- PZN: it
    seems odd to put the biggest as last, and although
    their #1 market position is very compelling, their top
    management team has lost all credibility with everyone. The
    new investor group is interesting, but still too many
    unknowns. There is alot of upside here, but the lawsuits
    that are bound to come from their actions will be a
    distraction.


    Basically, everyone in this group is beaten down far below
    where they should be (so you probably won't go wrong
    with any of them). However, my ranking of the above
    is, IMHO, the choice of where to put the most of your
    money respectively, because to make the "real money",
    it will be the top companies above that will really
    break out of the pack .... and when this industry does
    come back, I think it will be in a big way.

    If
    you're willing to weather some ups and downs, these are
    great investments for both the short term and long
    term.

    Good Luck.