Locking In A Winner?

Corrections Corp. of America (CXC) is one company with a real captive market: It's in the prison business. "It's the stock to own for at least the next 10 years if you're looking for a company that's dominant in an erupting market," says investment pro Andrew Lanyi of Ladenburg Thalmann.

Among Lanyi's biggest winners this year is Steris, up 168%, Alternative Resources, 127%, and PhyCor, 105%. Corrections, his most recent pick, has already jumped to 45 from 28 in early March. Lanyi insists the stock has a lot more upside room.

Why? Earnings are up. In 1994, they rose 51%, to 53 cents a share, on revenues of $120 million. This year, earnings will zoom to 75 cents on revenues of $185 million and then soar to $1.31 a share next year on sales of $275 million.

The privatization of prisons is on the rise, says Lanyi, explaining Corrections' tremendous gains. The company is the leader in designing, building, and managing prisons and correctional facilities. The number of prison beds under contract with Corrections has grown from 9,331 at the start of 1994 to 21,675 by mid-1995.

"The business is not only recession-proof but counter-cyclical as well," notes Lanyi. It makes money when the economy is humming--and more money in bum times when crime speeds up and jails get more swollen with inmates. Corrections manages more than 40% of the privately run prison market, he notes. And that market is growing.