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 Leidos Holdings Inc. (NYSE:LDOS) 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.
READ ALSO: 12 Best RV and Camping Stocks To Buy Now and 7 Most Profitable Food Stocks To Invest In.
Innovations in Technology for Prisons and Law Enforcement
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.
Recent Events and Market Reactions
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.
Our Methodology
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).
A police officer demonstrating the latest in defensive technologies from the company.
Leidos Holdings Inc. (NYSE:LDOS)
Number of Hedge Fund Holders: 34
Leidos Holdings Inc. (NYSE:LDOS) is a leading company that specializes in innovation and technology solutions for customers in highly regulated sectors, including national security, law enforcement, health, weapons systems research and development, and airborne operations.
In the third quarter of 2024, Leidos Holdings Inc. (NYSE:LDOS) reported revenues of $4.2 billion, a 7% increase from the same quarter in the previous year. The company achieved an impressive adjusted EBITDA of $596 million, reflecting a 32% rise year-over-year, and a record adjusted EBITDA margin of 14.2%. During Q3 2024, net bookings totaled $8.1 billion, resulting in a substantial backlog of $40.6 billion by the end of the quarter. Noteworthy contracts that Leidos Holdings Inc. (NYSE:LDOS) was awarded during the quarter include a $331 million agreement to modernize the US Army’s network and a $249 million contract to enhance security at 92 additional Army and select joint-service installation access control points worldwide. These projects demonstrate the company’s commitment to advancing national security through innovative technology.
Over the past year, Leidos Holdings Inc. (NYSE:LDOS) has seen significant growth in its Health & Civil segment. Leveraging a team of scientific experts, this segment has become a leader in both growth and profit margins. Leidos Holdings Inc. (NYSE:LDOS) provides essential services, including disability and occupational health evaluations for clients like the Department of Labor, the FBI, and the US Secret Service. This includes conducting medical disability examinations for veterans and active duty members preparing to discharge, particularly in light of increased demand due to the PACT Act, which enhances support for veterans’ healthcare needs.
With consistent revenue growth, a solid backlog, and strategic contracts in national security, Leidos Holdings Inc. (NYSE:LDOS) stands out as a promising stock for investors interested in the law enforcement sector.
Overall, LDOS ranks 5th on our list of the best prison and law enforcement stocks to invest in. While we acknowledge the potential of LDOS 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 LDOS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. This article is originally published at Insider Monkey.