Corrections Corporation of America (CXW)

Federal customers, via three agencies, account for 41% of CXW’s revenue base: any drastic change in policy and/or federal budgets (mandating new prison build outs) would most likely pound the stock. 4) CXW runs a capital intensive business: it costs ~$70K per bed to build each facility ($414M planned CAPX for ‘08, an 11% increase from 2007) -- slower-than-expected facility ramp up would create an immediate cash flow drain. The silver lining in all this is that the correction facility business is high barrier-to-entry

Federal customers, via three agencies, account for 41% of CXW’s revenue base: any drastic change in policy and/or federal budgets (mandating new prison build outs) would most likely pound the stock. 4) CXW runs a capital intensive business: it costs ~$70K per bed to build each facility ($414M planned CAPX for ‘08, an 11% increase from 2007) -- slower-than-expected facility ramp up would create an immediate cash flow drain. The silver lining in all this is that the correction facility business is high barrier-to-entry

Unions representing prison guards sued CXW last year, claiming that the transfer of inmates from prisons to facilities was infringing on prisoner rights; there is no guarantee similar cases will not break out in other states; investors need to keep their eyes on everything to congressional hearings to abuse cases to CXS’s large insurance expenditures.

Investor backlash at the idea of profiting off the incarceration of inmates may create enough negative sentiment to keep potential investors on the sidelines

Unions representing prison guards sued CXW last year, claiming that the transfer of inmates from prisons to facilities was infringing on prisoner rights; there is no guarantee similar cases will not break out in other states; investors need to keep their eyes on everything to congressional hearings to abuse cases to CXS’s large insurance expenditures.