We recently compiled a list of the 10 Best Prison and Law Enforcement Stocks To Invest In. In this article, we are going to take a look at where Olin Corporation (NYSE:OLN) stands against the other prison and law enforcement stocks.
The United Nations Office on Drugs and Crime (UNODC) report “Prison Matters 2024: Global Prison Population and Trends; A Focus on Rehabilitation” found that after a decline during the COVID-19 pandemic, the global prison population rose to approximately 11.5 million in 2022, reflecting a 5.5% increase since 2012. Despite this rise, the overall percentage of incarcerated individuals compared to the total world population has actually decreased, primarily due to faster population growth.
Overcrowding remains a significant issue, affecting over 60% of countries, which raises serious concerns regarding the health and human rights of inmates. Additionally, there is a pressing need for improved measures to prevent deaths in custody, as suicide accounts for more than 10% of all prison deaths. In some countries, prisons also face staffing shortages, which can compromise safety and hinder rehabilitation efforts.
The landscape of prisons and law enforcement is evolving, marked by significant trends and changes in policy. The use of technology in law enforcement is on the rise, particularly with artificial intelligence (AI) tools designed to streamline operations and reduce administrative burdens. As reported by CNBC on November 26, many companies are stepping in to assist police departments. For example, Truleo has developed an AI technology that automatically generates narratives by capturing real-time voice notes from officers in the field. CEO of Truleo, Anthony Tassone, emphasizes that this method to generate police reports is both efficient and ethical.
Another company, 365Labs, focuses on improving the quality of police reports through AI-driven grammar and error correction. CEO of 365Labs, Mohit Vij, acknowledges that while AI can help with basic writing tasks, human judgment remains crucial for serious incidents like burglaries or assaults. This combination of technology and human oversight aims to enhance the efficiency of law enforcement while ensuring that officers can effectively serve their communities.
On November 11, CNBC reported that private prison stocks rose after President-elect Donald Trump’s appointment of Tom Homan as his “border czar.” Homan, who led Immigration and Customs Enforcement (ICE) during Trump’s first term, will oversee all deportation efforts for undocumented immigrants. Trump emphasized that Homan will manage security at the southern and northern borders, as well as maritime and aviation security.
Previously, in July, Homan had stated his intention to run an extensive deportation operation, claiming it would be the largest in US history. Analyst Isaac Boltansky from BTIG noted that a second Trump administration would likely increase contracts with the US Marshals Service and the Federal Bureau of Prisons, suggesting a more aggressive approach to border enforcement that could benefit companies involved in immigration enforcement and detention services.
To compile our list of the 10 best prison and law enforcement stocks to invest in, we used the Finviz and Yahoo stock screeners to find the largest security and law enforcement companies. We also reviewed our own rankings and consulted various online resources. We carefully verified our list to remove any companies that can not be classified as prison and law enforcement stocks.
From an initial pool of more than 20 prison and law enforcement stocks, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 best prison and law enforcement stocks to invest in are ranked in ascending order based on the number of hedge funds holding stakes in them.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Olin Corporation (OLN) The Best Prison and Law Enforcement Stock To Invest In?
Pixabay/Public Domain
Number of Hedge Fund Holders: 33
Olin Corporation (NYSE:OLN) is a manufacturer and distributor of chemical products and a leading US manufacturer of ammunition. Through its Winchester ammunition brand, the company produces and distributes sporting ammunition, law enforcement ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.
In the third quarter of 2024, the company reported sales of $1.58 billion, down from $1.67 billion in the same quarter last year. Olin Corporation (NYSE:OLN) faced challenges due to Hurricane Beryl, which impacted operations and is expected to result in a total loss of approximately $135 million for 2024. Despite these setbacks, Olin Corporation’s (NYSE:OLN) Winchester segment showed resilience, with sales rising to $432.8 million, up from $380.2 million in Q3 2023. This growth was driven by increased military sales and the acquisition of White Flyer in Q4 2023, which enhances the company’s position in recreational shooting sports. Notably, Winchester’s Q3 2024 military shipments and project revenue increased 35% sequentially.
In the Q3 2024 earnings call, Olin Corporation’s (NYSE:OLN) management shared that construction has begun on the Army’s Lake City Next Generation Squad Weapon ammunition facility. This fully funded project by the US Army is expected to enhance Winchester’s revenue from the Lake City operations and increase the company’s involvement in global defense initiatives. The new facility will support the production of advanced ammunition, aligning with the Army’s modernization efforts and solidifying Winchester’s position in the defense sector.
Overall, OLN ranks 6th on our list of the best prison and law enforcement stocks to invest in. While we acknowledge the potential of OLN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than OLN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
