Although I defer to the General's wisdom in all things technical and do think his approach has some merit, I look at CXW based on more company-specific, growth outlook information. In that light, it's not hard for me to see why the stock price is ...leveling off a bit after the tremendous growth we saw in 2004 (remember, it started the year around $28 or so).
In the earnings release and subsequent CC, it seemed to me that after you made all the accounting adjustments (and Irv Lingo sure knows how to make 'em, doesn't he) CXW's performance was relatively flat compared to 2003. Further, they revised earlier forecasts for 2005 earnings - downward. No wonder there's a mini-selloff going on (those who have been around a long time know a real selloff when we see one).
Right now CXW is a growth stock, but there's no evidence - to me - that the industry itself is growing significantly outside the Federal sector. The Texas contracts, which are a drag on earnings, were a reshuffle, not a net growth. In five years they'll be rebid, and low bid will win whether it's CCA or some other private company.
Where are the new states? There's no evidence that CCA has achieved any market penetration in the northeast or midwest. What about urban jails - a big growth prospect several years ago, and CCA with the Tulsa jail ought to be in a good position to get some. But I don't see the level of interest, legislatively, in privatization that we saw in the 1980's and 1990's.
And I'm sure CCA has deployed an army of business developers to shake every tree they can find. I'm not criticizing management or its effort. I'm just wondering what the true size of the private corrections market really is. We've been stuck at 4-6 percent for a long, long time.