"With state governments going bankrupt, the last thing bureaucrats want to do is spend precious resources on managing their prison systems," explains growth stock expert Marc Lichtenfeld.

The senior analyst for Xcelerated Profits Report suggests, "For-profit institutions are usually able to provide prison services more efficiently than the government can. And there’s one company that stands out -- The GEO Group (NYSE: GEO)."

"Nearly two-and-a-half million people are behind bars in American prisons. The U.S. incarceration rate is five times higher than the world average and the U.S. prison population is still rising. 

"The problem here is two-fold. As the economy worsens, not only are social services being cut across the country, it could also trigger a rise in crime, the latter of which will exacerbate prison overcrowding. 

"With state and local governments finding it increasingly tough to cope – both in terms of finances and manpower, privately run prisons have helped ease the burden over the years.

"And these for-profit institutions are usually able to provide prison services more efficiently than the government can. And there’s one company that stands out here.

"Founded in 1984 and based in Boca Raton, Florida, GEO operates 62 detention and correctional facilities; it has 49 facilities in the US, with additional operations in Australia, Britain, and South Africa. Its facilities have a total capacity of 60,000 inmates. 

"Right now, shares are cheap. When you couple what should be reliable growth with a bargain buy, you’re looking at a solid investment.

"For example, the stock currently sports a P/E ratio of 14.8, compared to its 10-year average of 18. And at 1.6 times its book value, it’s trading at a discount to its 10-year average of 2.1. And the 0.9 times sales ratio is inexpensive by almost any metric. 

"Now, constructing these prisons and correctional facilities does require a good chunk of capital, which explains the $387 million worth of long-term debt on GEO’s books.

"In 2013, $150 million of this will mature, but given that GEO generated $116 million in cash flow from operations over the past 12 months, servicing that debt between now and 2013 should be no problem. 

"By 2013, however, it’s likely that management will have to borrow some more money. Right now, though, that’s not an issue for us. And management currently has GEO firing on all cylinders. 

"Margins are at their highest level in five years – and are expected to increase further. Both return-on-equity and return-on-assets are steadily climbing, too. 

"With facilities around the globe, and several that focus on mental health treatment and immigration detention centers, GEO’s business is a well-rounded mix that is capitalizing on the trend of rising inmate populations.

"And given that our society unfortunately tends to treat the symptom (crime) rather than the cause (poverty), the trend should only accelerate into the future."