Prison stocks are the talk of Wall Street today following the expiration of the highly controversial Title 42 program. Indeed, companies like CoreCivic (NYSE:CXW) and GEO Group (NYSE:GEO) are in the green today in anticipation of the lifting of the former President Donald Trump-era border policy.
So, what exactly is Title 42?
Title 42 refers to an emergency health authority approved during the Trump administration in March 2020. The authority essentially enabled U.S. border officials to turn away migrants who arrived at the U.S.-Mexico border in order to prevent the spread of Covid-19. Prior to Title 42, migrants who crossed over illegally were permitted to pursue asylum and were frequently allowed into the U.S. to be screened and to wait out their immigration cases.
Under Title 42, migrants were denied the right to seek asylum more than 2.8 million times. Families and children traveling alone were still permitted to pursue asylum, however.
In 2022, President Joe Biden attempted to end the use of Title 42 only to face backlash from Republicans, who argued the additional restrictions were necessary for border security. In January, however, the Biden administration announced it would be rolling back national Covid-19 emergency authorities, including Title 42.
At 11:59 p.m. Eastern on Thursday, Title 42 protocols will be lifted. In its stead, a series of new policies will be put in place intended to “crack down on illegal crossings” with the kicker that anyone who comes to the U.S. can now legally pursue asylum.
So, what does this mean for prison stocks?
Prison Stocks Climb on Expectations of Higher Detainments
As a result of the expiration of Tile 42, more migrants will be allowed to enter the U.S. with the intention of claiming asylum. Because of this, it’s also expected that more people will be detained by Immigration and Customs Enforcement (ICE). Some believe the new influx of migrants will put a strain on processing facilities and ports of entry.
“I think that there is no question that this is going to be extremely challenging,” said Homeland Security Secretary Alejandro Mayorkas, “I do not want to understate the severity of the challenge that we expect to encounter.”
This is likely the reason companies like CoreCivic and GEO Group, which operate and maintain illegal immigration centers, are in the green today.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
