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.

Market Outperform - Price 17.77 on Nov. 3
by Avondale Partners

GEO, which privatizes correctional facilities, reported 3Q08 results in line with top-line expectations and one cent ahead on bottom-line. It reported revenues of $251.9 million, versus our model of $252.2 million and its guidance of $247 million to $253 million. Pro forma EPS of 34 cents was one cent ahead of our estimate. Our channel checks, which cover about 75% of GEO's inmate populations, projected there would be an increase of approximately 600 inmates versus our 343 model; actual was 228. We believe the primary difference relative to our checks is GEO Care populations. Market cap: $929 million.

P/E of 31 and PEG is 1.16

Market Outperform - Price on 24.15 Feb. 13
by Avondale Partners

Aided by a weak U.S. dollar, [this]provider of outsourced correctional, detention and mental-health services to government reported 4Q results [above] expectations...GEO reported operating revenues of $235 million, versus $225 million to $230 million guidance and our expectation of $231 million; Ebitda of $32.3 million was below our...$34.4 million...Higher interest income more than offset the differen[ce]; EPS was 27 cents versus consensus 26 cents...Target: 33. Market-cap: $1.2 billion.

GEO (GEO), which was hurt Friday by the announcement that it is losing a contract in Texas, trades at 26 times estimated earnings for this year. But its CEO sees no impact on this year's earnings from the Texas decision. Indeed, net could well rise by more than 25%, to $1.36 a share, perhaps lifting the shares to $35 from the high 20s.

A prison company with facilities in the United States, Australia, Canada, South Africa, and the U.K. More of a longer term pick as costs for additional facilities may delay the incremental income expected from a new contract.

inherited

spanky pick . . . prison stock on a tear

growth
underinvested area

P/E is 36 and PEG is 1.7.