"Crime doesn't pay" may be great folk wisdom, but crime-fighting stands out in the US economic line-up as a major producer of both jobs and revenue. According to the National Council on Crime and Delinquency, the US prison system alone has become a $42B annual industry. And that's just the last stop in a "supply chain" that is being fed by high-tech, high-ROI crime-fighting tools, homeland security, and immigration policy enforcement as it enriches both local governments and corporations.
Suddenly everyone wants in on the act. As our overseas wars wind down, defense suppliers are profiling new markets for military technology. Cash-strapped municipalities are on the lookout for any edge they can find in generating fine and ticket revenue. The privatization of prison construction and management has been a boon to many rural areas. And Big Brother is watching -- and listening -- as big-data revolutionizes the economics of law enforcement with low-cost, turnkey solutions.
So, how can investors capitalize -- 100% legally, of course -- on these market trends? For starters, Bonnie and Clyde need not apply because these days, data banks are a lot more important than the brick-and-mortar kind in understanding where the opportunities lie. And if, like one-hit wonder Rockwell
(and his back-up singer, Michael Jackson), you "always feel like somebody's watching me
," remember -- you're probably right!
So, banish any untoward thoughts of insider trading because you won't be needing an orange jumpsuit to profit from Big Law and Order in the US today. Here are three trends to put on your radar that are revolutionizing today's crime-fighting industry:
According to Corrections
, a documentary by Ashley Hunt, the US prison population has increased by 614% since 1970 to well over 2 million today, giving the US a higher rate of incarceration than any other country in the world. Chris Kirkham of HuffPost Business
notes that public-private partnerships and the detention of illegal aliens are the factors that continue to drive prison growth today. He quotes former CAA board chair William Andrews reporting to investors that, "The policy in this country has changed from catch and release to more detention. That means we'll be incarcerating more illegal aliens." Kirkham goes on to make the point that "Rural towns and counties have eagerly embraced the arrival of immigrant prisoners for the attendant economic benefits, including tax revenues and jobs."
Two publicly-traded companies dominate the corrections management industry, Corrections Corp. of America (NYSE: CCA
), which partners with government to provide turnkey prisons from construction to daily management, and the GEO Group (NYSE: GEO
), which delivers both corrections and mental health services on a per capita basis.
Last week, Microsoft (Nasdaq: MSFT
) and the New York Police Department (NYPD) announced a groundbreaking joint venture, the Domain Awareness System. It is a crime-fighting and intelligence network that combines surveillance video, 911 call reports, mapping software, and predictive analytics to combat terrorism and crime -- in real time. Would-be criminals won't want to underestimate the financial and analytical dream team behind the project: Mayor Mike Bloomberg, founder and CEO-on-hiatus of Bloomberg LP
, and Microsoft VP for US Public Sector Services, Mike McDuffie
, former general in the US Army and director of logistics and engineering for the Joint Chiefs of Staff.
According to the Wall Street Journal
, New York City will receive 30% of the revenue as Microsoft sells the technology to police forces in the US and allied countries. New York City fully expects to profit on its investment, thought to be as high as $40 million, giving the overall project an expected upside of $133 million and counting.
James Bond's 007 car that turns into a boat
? So last-century! Today's crime-fighters can expect to be shaken and stirred by the likes of surveillance drones
the size of large spiders, geofencing to contain parolees
, virtual accident reconstruction systems that keep traffic moving
, and non-lethal laser weapons to distract and subdue suspects
. The list goes on and on, but it isn't a wish list -- it's all available right now to police forces around the country.
There are three keys to the escalating adoption of these futuristic crime-fighting tools. First, they are often developed in partnership with the US government, which bears all of the R&D costs and brings the price-tag down to levels even local police departments can afford. Second, technology costs pale in comparison with hiring (and paying benefits for) living, breathing police officers who tend to be hired young. Finally, the technology is so unbelievably futuristic and cool that it's hard to resist.
Spoiler alert: Not all of the high-tech players are public companies or traded on US exchanges. Those who can be tracked include Lockheed Martin (NYSE: LMT
), the market leader in drone technology; Geo Eye (Nasdaq: GEOY
), an innovator in predictive policing; Sokkia
Topcon (Tokyo: 7720
), a worldwide innovator in GPS and virtual accident reconstructions; Finmeccanica (Milan: FNC.MI
), the world leader in automatic license plate readers; Laser Energetics, Inc. (OTC Pink Sheets: LNGT
), makers of Dazer Laser light fighting technology; and surveillance camera maker Digital Ally (Nasdaq: DGLY
Private companies to watch are Nixle
and Send Word Now
, leaders in social media warning systems, and Boston Dynamics
, whose Website robot pictures are guaranteed to keep you on the right side of the law-while talking in whispers.