Increasing serious crime rates and draconian punishments for minor drug violations have resulted in overcrowded prisons and an overburdened criminal rehabilitation government infrastructure. Private companies have arisen out of the government prison mess to help deal with and profit from the situation.

Capitalism is an amazing system by creating profit centers in the most obscure fields. Figuring a way to profit from the punishment of crime is quite an accomplishment and an impressive nod to the beneficial powers of the marketplace. Our Long Term PowerRatings Stock Spotlight this week is on one such company that profits from crime punishment and rehabilitation, Corrections Corporation of America (NYSE:CXW - News).

For those of you unfamiliar with our Long Term PowerRatings, they are based on 12 years of extensive, statistically significant studies, across most market environments. Our research has clearly shown that stocks that earn a 10 rating have an 81% chance of being higher one year later. Those possessing a 9 rating have a 79.1% chance of trading higher one year later. In this volatile, uncertain market environment, allow Long Term PowerRatings to assist you in building a profitable and safe portfolio.

Corrections Corporation of America has only earned a 2 Long Term PowerRating. However, it is definitely worthwhile to place on your watch list for improvements. The company is the largest owner/operator of privatized prisons in the United States. They run 64 prisons and are only second to the Federal Government and 3 states in number of facilities owned. Corrections Corporation is also involved in prisoner transportation, health care, food services, recreational programs and work help for inmates. The company is expanding and turned in positive fourth quarter results. The fourth quarter included a 14.3% increase in EPS, an impressive 38% increase in Adjusted Free Cash Flow and an EBITDA increase of 16.7%.

Interestingly, the states of California and Idaho added to these gains due to increased prisoners from these states as well as U.S. Immigrations. The states of Minnesota, New Mexico, Washington, and Wyoming off set the gains due to declining prisoner populations. In 2009, they are expecting EPS to be between $1.10 and $1.20, this misses analysts estimates. A stock repurchase plan was just instituted to help lift share prices.

Technically, the stock looks grim. It has been downtrending but experienced a sharp decline yesterday, dropping to below $11.00/share due primarily to their projections missing analysts estimates for 2009. The stock has begun a bounce today on the chart. The company appears to have a solid business and should be watched closely for improvements.

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