The Trump administration could be a boon for private prison companies in the United States if the president-elect keeps his promise to crack down on illegal immigration.

CoreCivic and Geo Group, the two largest private prison operators in the United States, have both contracted with U.S. Immigration and Customs Enforcement (ICE) to house detained undocumented migrants. Their stocks soared Wednesday after Trump’s election victory, with investors betting that companies will see higher profits thanks to a tougher administration on immigration.

CoreCivic, which closed at $13.50 per share on November 5, is trading at $22 per share, while Geo Group, which closed at $15 per share on Tuesday, is currently trading at $23.75 .

“Clearly, investors think there will be a significant increase in opportunities for both of these companies under the Trump administration,” Joe Gomes, an analyst at Noble Capital Markets, told CBS MoneyWatch.

Geo Group executives acknowledged Thursday during the company’s third-quarter earnings conference call that they expected the new administration to adopt stricter border security policies and that the company was “ready to provide additional resources to help ICE meet future needs.”

CoreCivic executives also said they believe the election outcome will boost demand for its services.

ICE is the largest customer

During Trump’s first term, from 2017 to 2021, immigration detention increased to record levels, according to the ACLU. report. In 2019, ICE arrested an average of more than 50,000 people each day. At times, that number exceeded 56,000, about 50 percent higher than the Obama administration’s record levels, according to the report. During his first term, Trump expanded the federal government’s use of private prison companies to detain immigrants.

As of January 2020, 81% of people detained by ICE in the United States were in facilities owned or operated by private prison companies, according to the ACLU report.

In his second term, President-elect Trump is promising a dramatic change in policy on the U.S.-Mexico border compared to his predecessor. This includes a commitment to overseeing the the largest deportation operation in American history, which could bring a lot more business to CoreCivic and Geo Group.

For the first nine months of 2024, ICE represented 30% of each company’s revenue.

Geo Group and CoreCivic said they currently have excess capacity to accommodate a larger inmate population. CoreCivic leaders indicated they are taking steps to prepare to activate additional capabilities to meet ICE’s needs. This could include reconfiguring facilities to accommodate a larger admission area, they noted.

“There is room for an increase in occupancy from a capacity perspective and both companies expect the Trump administration to request more beds. The question is how many, and we We don’t know at this point,” said Brian Violino, an analyst at Wedbush Securities. CBS MoneyWatch.

Monitoring

Geo Group also provides surveillance services for ICE through its Intensive Surveillance Appearance Program (ISAP), a surveillance program using wearable technology that serves as an alternative to detention.

“If there are a limited number of beds and a significant number of people are detained, which is what Trump is talking about in his plans, there could be increased use of this alternative to detention,” Violino said.

Geo Group executives said they have the technology and human resources to expand the contract to more than several million participants, if necessary.

Congressional financing

The extent to which ICE expands its contracts with the two largest private prison companies depends on the size of the funding increase authorized by Congress. Although Republicans won a majority in the Senate in Tuesday’s elections, it remains to be seen which party will gain control of the Senate. United States House of Representatives.

“That’s a big part of the story, and if it’s a Republican victory, it will be easier for Trump to get funds from Congress to support the operation he plans to carry out.” , Violino said.