Frankly, the early market action in 2019 has been fascinating. It's been fun to watch some of those that got beaten up badly in 2018 show some signs of life early in the New Year. Fitbit (FIT) came out of the gate strong on Wednesday, rising 8% before giving some of that back in Thursday's action. Yesterday, ROTH Capital suggested that fourth quarter sales for FIT will be strong, and reiterated both a "Buy" rating, and an $8 price target.
Even embattled dairy name Dean Foods (DF) , which had a dreadful 2018, has perked up in the first two trading days of 2019, and is up about 12%. Still, DF has a long way to go, and getting back to profitability would be a nice start - consensus estimates expect that to happen this year, but we'll see.
Even JAKKS Pacific (JAKK) , which ended 2018 under $1.50/share, after getting nailed in the final weeks, has perked up a bit, and is up nearly 30%. On Wednesday, shares were up 22%, but the even better news was that action was on about 5X normal average volume.
Elsewhere, in private prison land, the news has not been so kind. The recently passed prison reform bill, which would limit jail sentences for some nonviolent offenders, is weighing on private correction names. CoreCivic (CXW) , is down about 11% since the bill was passed by the Senate, but the damage started earlier. Shares are down about 23% since Election Day, when the Democrats took control of the House.
A letter sent to private prison operators by Sen. Elizabeth Warren and fellow Democrat senators regarding their immigration detention standards also reinforced the notion that the industry is heavily influenced by politics.
Private prisons have long been controversial, with some believing that corrections should only be run by governments, be they local, state or federal. In 2016, CXW shares fell to the low teens after the Department of Justice announced that it would phase out its use of privately run prisons. Hillary Clinton's expected presidential victory was seen as an additional nail in the coffin of the industry. However, the DOJ backtracked, and Clinton lost, and CXW shares soared between the summer of 2016 and the following April, rising 250%.
Now CXW is close to a round trip, trading in the mid-$17 range, and once again, out of favor, while yielding close to 10%. The real question is whether there is a place for privately run prisons, and whether cash-strapped governments will continue to outsource for what has been viewed as a lower cost solution.