Investors anticipate a boom in immigrant detention centers.

by Matt Stroud
November 18, 2016, 5:00 AM EST

In August, the U.S. Department of Justice issued a statement announcing it would stop contracting with private prisons to house inmates serving federal sentences. The news sent the stock of Corrections Corporation of America, the world’s largest private prison company, plummeting. The share price stayed down until the day after Donald Trump’s election, when it jumped 40 percent. The company’s main competitor, Boca Raton, Fla.-based GEO Group, rose 30 percent.

The Nashville-based company changed its name to CoreCivic in October. Along with its prison business, the company oversees detention centers used to house thousands of undocumented immigrants picked up by U.S. Immigration and Customs Enforcement. “CoreCivic is well-positioned to provide innovative, dependable solutions,” says Jonathan Burns, CoreCivic’s director of public affairs.

For-profit prison companies “were likely to face negative headlines and persistent contract uncertainty under a Clinton White House,” Isaac Boltansky, senior vice president and policy analyst at Washington-based Compass Point Research & Trading, wrote after the election. “We expect a Trump administration to be more supportive given its focus on immigration and crime.”

In a Nov. 13 interview with 60 Minutes, Trump said he intends to move ahead with plans to deport or detain millions of undocumented immigrants after he takes office: “What we are going to do is get the people that are criminal and have criminal records, gang members, drug dealers, we have a lot of these people, probably 2 million, it could be even 3 million, we are getting them out of our country or we are going to incarcerate.”

In July and August, GEO Group contributed a total of $200,000 to groups working to elect Trump. Mother Jones reported its largest contribution came on Aug. 19, the day after the Justice Department announced it would phase out private prisons. “Our company’s political activities focus entirely on promoting the use of public-private partnerships, including in the delivery of offender rehabilitation programs, both in-custody and post-release,” says spokesman Pablo Paez. “As a matter of long-standing policy, our company does not take a position on or advocate for or against any specific criminal justice, sentencing, or immigration policy.”

While investors see upside for prison companies, they’re showing signs of caution. CoreCivic’s stock is valued at only a little more than half its 2016 peak. GEO Group has had a stronger recovery, but it’s still shy of its top value, reached earlier this year.

It’s not clear that the government would require a dramatic increase in detention center capacity even if Trump’s deportation plans are enacted. Border crossings have fallen, cutting into the demand for facilities to hold people arrested as they come into the U.S. Undocumented immigrants not caught at the border are entitled to post bond while removal proceedings move through immigration courts. Those courts face a backlog of more than 520,000 cases, according to the Transactional Records Access Clearinghouse at Syracuse University, which tracks law enforcement statistics.

The Obama administration has already been targeting undocumented immigrants with criminal records for deportation. ICE estimates that 1.9 million immigrants with criminal records are in the U.S., according to a September Congressional Research Service report. That includes people who have green cards and visas. A July 2015 report from the nonprofit Migration Policy Institute put the number of undocumented immigrants with criminal records at about 820,000. Of those, 690,000 are already being flagged to ICE for deportation.

Obama has also, controversially, overseen raids and deportations of undocumented immigrants, including women and children who fled Central America in 2014. “We’ve already experienced increasing criminalization of immigration in the past few years,” says Jeremy Mohler, a researcher at the Washington watchdog group In The Public Interest. “Trump’s plan would be more of the same but on steroids.”

The bottom line: Obama vowed to cut federal reliance on prison contractors, but Trump’s immigration plans may mean new business.