We recently published an article titled Jim Cramer Thinks These 13 Stocks Will Benefit From the New Administration. In this article, we are going to take a look at where CoreCivic, Inc. (NYSE:CXW) stands against the stocks that will benefit from the new administration according to Jim Cramer.
Jim Cramer, the host of Mad Money, recently raised concerns about the current state of the market, particularly highlighting what he perceives as signs of “excess”. He also examined what he referred to as “Trump trades,” or stocks that Wall Street has been gravitating towards in anticipation of what President-elect Donald Trump’s administration might bring.
He pointed to private prison operators and oil service companies as examples of sectors benefiting from these expectations. Focusing on oil, Cramer noted that a number of smaller oil service stocks have surged this month. He pointed out:
“Now one of the few things that we know for certain about President-elect Trump’s economic agenda is that he wants our country to produce even more oil than it’s doing. His new pick for treasury secretary, that’s Scott Bessent, has advocated for the country to produce an incremental 3 million barrels of oil per day.”
READ ALSO Jim Cramer’s List of 7 Energy Stocks for the Trump Trade and Jim Cramer’s Game Plan: 13 Stocks in Focus
Cramer sees this as positive news for oil service companies involved in the extraction of resources. However, he also warned that this surge in production could exert downward pressure on oil and gas prices, much like what occurred in 2016. Despite this, Cramer highlighted that the major players in oil services have posted impressive gains in November, with some smaller operators making unexpected appearances on the list of the market’s hottest stocks. Shifting to the cryptocurrency market, Cramer addressed the significant rise in Bitcoin’s value. He noted:
“Now that rally is taking up practically the whole cryptocurrency ecosystem… Obviously, the gains in crypto, especially the Bitcoin ecosystem, seem excessive, but again, they aren’t without reason. We’re going from a Biden regime that was pretty antagonistic towards crypto to a second Trump administration that promised to be incredibly crypto-friendly.”
Cramer also pointed out that under the Biden administration, the government had been more paternalistic, aiming to regulate and control crypto, while Trump has promised a much more supportive stance towards Bitcoin. Cramer believes that a Trump administration that actively supports Bitcoin could lead to significant hoarding of the cryptocurrency, especially in the context of a strategic Bitcoin reserve.
This could benefit Bitcoin holders or “hodlers,” as they are often called in the crypto community. He also suggested that owning Bitcoin or an ETF that tracks its performance could serve as a hedge against potential inflation, particularly if the government continues to print money to address its deficit. Cramer voiced his own support for Bitcoin, saying, “call me in favor of owning Bitcoin,” and also recommended purchasing Ethereum, which he owns, despite it lagging behind Bitcoin in recent performance.
“I’m a believer, but these are hedges for me, and if you’re hoarding crypto, be ready for the breakdown no one thinks can come.”
Our Methodology
For this article, we compiled a list of 13 stocks that were discussed by Jim Cramer during a recent episode of Mad Money on November 25. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A prison guard walking down a hallway filled with inmates in a correctional facility.
CoreCivic, Inc. (NYSE:CXW)
Number of Hedge Fund Holders: 26
Cramer discussed CoreCivic, Inc. (NYSE:CXW) stock rallying in November, especially after the election results came in. Here’s what he said:
“The two big private prison operators, GEO Group and CoreCivic have rallied 85 and 59% respectively since the beginning of November. These tend to be winners whenever the GOP is in power, but they’re rallying particularly hard this time because Trump ran on an agenda of mass deportations. Keep in mind though, GEO Group and CoreCivic roared from the 2016 election to Trump’s inauguration day in January 2017, but then they spent most of the next four years going lower. My view, legitimate thesis here, but the gains are so extreme that I worry they’re running out of upside.”
CoreCivic (NYSE:CXW) owns and operates correctional, detention, and residential reentry facilities, providing rehabilitation programs and government real estate solutions. As of the third quarter, it reported strong financial results. The company saw an increase in its compensated occupancy, reaching 75.2% in the quarter, up from 72.0% in the same period the previous year.
Net income for the quarter amounted to $21.1 million, or $0.19 per diluted share, compared to $13.9 million, or $0.12 per diluted share, in the third quarter of 2023. During an earnings call, management also provided insights into the U.S. federal prison population trends. At the end of President Obama’s second term, the national population of federal prisoners under the U.S. Marshals Service stood at nearly 47,000. This figure rose to nearly 67,000 under President Trump’s first term, peaking in early 2020 before settling at around 66,000 presently.
In response to ongoing demand and the change in administration, CoreCivic (NYSE:CXW) is working proactively to activate and maximize the use of its available bed capacity, which amounts to about 18,000 beds. The company’s long-standing relationship with U.S. Immigration and Customs Enforcement (ICE) was also highlighted by President and CEO Damon Hininger, who noted that ICE was the company’s first customer.
Overall CXW ranks 6th on Jim Cramer’s list of stocks that will benefit from the new administration. While we acknowledge the potential of CXW as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CXW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.