Jeff Nahley and other investment bankers at Signal Hill Capital are spending some time this week in Denver at the American Correctional Association's semi-annual convention. They're going armed with a comprehensive report on the various arms of the industry that says its big players should see their valuations rise in the coming years as spending per inmate climbs and various governments struggle to free up cash to invest in new facilities.

There have been sporadic bursts of valuation momentum in the bull market environments associated with 1997 and 2007. Ironically, performances of 2002 and 2012 look similar as our economy crawled out of a recession. Accordingly, by extrapolation, we see cyclical "upside" to the industry based on historical trading patterns.