America has 5% of the planet's population, but 25% of its prisoners. This should be good news for the private prisons that absorb the spillover from our congested federal and state penitentiaries, but, alas, the recession has ruffled the economics even of law and order. Cash-strapped states seeking to cut the cost of housing inmates are mulling drastic measures, ranging from quicker paroles to earlier releases. Not only have the headlines alarmed some citizens, they have frightened investors as well. As a result, private-prison stocks are selling at unusual -- and untenable -- discounts. The three biggest companies are Corrections Corp. of America (CXW), which controls 39% of private-prison beds, Geo Group (GEO), which runs 25%, and Cornell (CRN), with 10%. While their stocks have rebounded this year, they still trade at 12 to 18 times what each is expected to earn in 2010 -- compared with multiples pushing 30 before the budget crisis.

Marshall finds all three worth considering but owns Geo, partly because the Boca Raton, Fla., outfit has the most international exposure. The privatization of prisons is in its infancy abroad -- penetration rates run from 17% in Australia to just 3% in South Africa -- and Geo earns 13% of its revenue overseas. Another 12% comes from its higher-margin criminal mental-health facilities. Last month, Geo snagged a contract to run an 832-bed prison in Sydney, its fifth facility Down Under. A plan to raise $250 million -- by selling eight-year notes yielding roughly 8.25% -- also bespeaks ambitions to expand its balance sheet and give rival Corrections Corp. a run for its money.

Corrections Corp. is the go-to stock for many investors as well. At 24, its shares trade at 17.9 times expected 2010 profits, compared with 13.5 times for Geo and 12.1 times for Cornell. Cornell doesn't get the same respect, because 26% of its revenue comes from lower-margin juvenile-detention facilities. But it is also the most sensitive to economic swings -- it doesn't take much to move Cornell's needle -- and hence more suitable for traders with an appetite for risk. Signal Hill's Robillard rates all three Buy, but he gives the short-term edge to Cornell over Geo, and to Geo over CCA over the next six to 12 months. CCA's recent run has already "priced in a lot of the growth re-acceleration," he says, "while Cornell and Geo can still catch up." In fact, analysts' conservative price targets put Cornell at 26, 10% above its recent quotes. Over the long run, however, Robillard argues that CCA's bigger balance sheet gives it the most options.

Anadarko and Tullow stocks have jumped sharply this year, mostly owing to new oil finds. If bulls are right about the production potential, the shares could rise more.

Tullow is much smaller-a $16 billion market capitalization, half the size of Anadarko -- Tullow is heavily leveraged to West Africa. Should a gusher come, the U.K. stock could rise sharply again, and more than Anadarko. Conversely, Tullow is more vulnerable if and when dry holes are drilled and could fall more than Anadarko. Indeed, last Thursday brought news of a dry hole drilled off Côte d'Ivoire, and Tullow's share price duly fell 2%. Clint estimates that wells being drilled in Ghana, Côte d'Ivoire and Sierra Leone over the next 12 months could bring 1.36 billion BOE net to Tullow and 0.92 billion BOE for Anadarko. That's 64 times Tullow's 2009 production and 4.5 times its reserves. His base-case net asset valuation is £14 a share for Tullow in 12 months, which doesn't include new leads to be drilled in West Africa.

Natural gas will be a plentiful source of energy in North America, especially as shale plays develop in the next few years. In fact, it's too plentiful for the liking of many producers, who have curtailed production. Throwing money into compressors, or Exterran stock, doesn't look like a very smart investment.

The stock had rallied about 28% since March, trailing the market chiefly as traders routed money toward riskier bets. It has started to pull back only recently as traders look ahead to the earnings report. Still, the stock is hardly cheap. At about 24, it trades at 15 times projected 2010 profits, compared with 13.3 times for the packaged food sector. At 3.2 times book value, Flowers still trades like the go-to name in carbs, and a majority of analysts are already bullish about the stock. Flowers reaches half the U.S. population, and the eventual expiration of its 2009 hedges might let it enjoy the benefit of lower costs -- but for how long? Wheat, after falling for much of this year, has just rebounded 22% this month.

Insurers, of course, would experience a nice run-up if the public option -- meaning a government-run competitor -- is dead and if Congress makes sure the maximum number of people will sign up for insurance. If you are willing to wager the insurers will not be clobbered by Congress, then consider an exchange-traded fund like iShares Dow Jones US Insurance (IAK).