We came across a bullish thesis on Target Hospitality Corp. (TH) on wallstreetbets Subreddit Page by devolution_king. In this article, we will summarize the bulls’ thesis on TH. Target Hospitality Corp. (TH)'s share was trading at $10.86 as of Jan 16^th. TH’s trailing and forward P/E were 12.48 and 35.09 respectively according to Yahoo Finance.

A row of hotel buildings illuminated at night revealing the companies hospitality arm.

Target Hospitality (TH) stands as a potentially undervalued beneficiary of Trump’s immigration policies, given its role as a provider of temporary accommodations for immigration detention and large-scale construction projects, such as infrastructure and oil exploration. Historically, TH has demonstrated resilience, benefiting from government contracts across multiple administrations, with notable success under Trump’s previous term. Following the 2024 election, TH's strategic positioning became evident with the appointment of a former Chief of US Border Patrol under Trump, signaling a clear intention to secure immigration-related contracts. Further reinforcing this, an ACLU FOIA disclosure confirmed TH’s proposal to expand ICE detention facilities.

The scale of the opportunity is substantial, with the Wall Street Journal estimating Trump’s immigration plan could cost $160 billion, a significant portion of which is expected to go toward detention centers. TH, with a modest enterprise value of $1 billion, stands to gain considerably even from a fraction of this expenditure. Beyond immigration, Trump’s commitment to boosting domestic oil production presents another growth avenue for TH, given its established presence in the Permian Basin, providing critical lodging solutions.

Comparable companies, such as GEO and CXW, have already seen sharp valuation increases in anticipation of policy shifts. While these peers operate private prisons and detention centers, TH is uniquely positioned as a smaller, more agile player with lower valuations, offering outsized potential. With the scale of necessary government expenditures, TH represents a compelling investment, poised to deliver significant upside as policy-driven catalysts materialize.

Target Hospitality Corp. (TH) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held TH at the end of the third quarter which was 21 in the previous quarter. While we acknowledge the risk and potential of TH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.