Republican Presidential candidate Donald Trump is currently a slight favorite to win the election.

At the time of this writing, election website FiveThirtyEight is giving the Republican candidate a 53 percent chance of victory. This prediction comes despite Democratic Nominee Kamala Harris having a 1.2 point national lead with 47.9 percent of the vote vs. 46.8 percent for Trump.

While this race is clearly going to be tight, there’s one more sector I’d consider paying attention to if the polls are correct and Trump does in fact win.

That sector is prison stocks.

Trump’s rhetoric for increased deportations of illegal immigrants has been a cornerstone of his campaign. If the market believes him, then you’re going to need somebody to provide that security. And it’s not going to just be government agencies like ICE. There will be a demand for contracted companies to aid in Trump’s immigration plan.

One of those companies is Geo Group (GEO).

GEO is a publicly traded C corporation that invests in private prisons and mental health facilities in the United States. Its facilities include immigration detention centers, minimum security and mental-health treatment facilities.

As you’ll see in the chart above, GEO is up 15% over the last week. And if Trump wins the stock will likely go up another 15-20%.

The ongoing U.S. immigration crisis and associated policy debates offer potential tailwinds for GEO.

Proposed increases in ICE detention beds and funding for electronic monitoring programs could significantly enhance GEO’s revenue and profitability.

Also, GEO’s fundamentals are strong.

Its international business remains stable, with ongoing contracts and new projects. So even if its stock does pose risk if controversial immigration policies aren’t implemented, it still has diversified revenue streams and strong market position to mitigate those risks.

YOUR ACTION PLAN

With its strong foothold in security, GEO is worth considering if Trump wins the election. The stock is up 15% over the last week, and I believe it could move another 15-20% in the event of a Republican victory.

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FUN FACT FRIDAY

How Elections Affect the S&P 500: Since 1950, the S&P 500 index has gained +12.1% a year under Democrats and +7.1% under Republicans (according to BMO Capital Markets)

Big Picture: If Republicans win, it could mean lower corporate taxes and less aggressive antitrust regulation, benefiting Wall Street and big tech.

Big Picture: If Democrats win, Americans are likely to see more spending on green technology, and more money in the pockets of low-income consumers.

To see exactly how we’re trading this potential market movement, we’re currently offering Trade of the Day subscribers like you a chance to get all our Election Week trades for FREE in The War Room.

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