When looking for fresh investing ideas, education stocks may not be the first thing that comes to mind. In reaction to the COVID-19 pandemic, however, online learning has become a flourishing business.
Education firms have several fascinating and lucrative business prospects. Investors may also profit handsomely. Let's investigate further.
COVID-19 and Education Stocks
The pandemic had a significant influence on schooling. According to a UN policy paper, from 2020, the virus has touched approximately 1.6 billion students in 190 countries. On a worldwide scale, the physical shutdown of schools and other learning venues harmed 94 percent of the student population. The percentage was as high as 99 percent in low- and lower-middle-income nations.
While the education industry has had to respond to COVID-19's turbulence, it has done so quite effectively. Even though education systems were harmed, stay-at-home decrees and the closure of schools and campuses prompted certain education enterprises to innovate.
Schools and organizations were obliged to adapt to new educational practices almost overnight. Since the epidemic, advances in online teaching, self-taught learning, and virtual check-ins have been made in the educational system. And some of these education stocks have had a significant influence on these developments.
I've compiled a list of seven education stocks to watch in 2021. I've provided highlights on what makes these firms worth considering to make things simpler.
Chegg
Chegg is one of the most popular direct-to-student learning platforms. The platform is aimed at kids in high school and college. Its headquarters are in Santa Clara, California, where it was formed in 2005. Chegg declared in its prospectus.
We assist students in preparing more efficiently for college admissions examinations, locate the ideal institution to help them achieve their objectives, improve their grades and test scores while in school, and find internships that will help them join the workforce after graduation. By assisting students in learning more in less time and at a lesser cost, we want to increase the overall return on investment in education.
Through its premium membership approach, the firm provides many Chegg services and essential resources. Among them are.
Study (help with homework)
Writing Instruments (online writing tools)
Calculator (math problem solver)
Tutors (online tutors)
thoughtful (online skills-based courses)
This online school store also has a wide range of resources for pupils. Print and online textbook rentals and purchases, internships, college application services, and scholarship services are all examples of these services.
Zoom
Zoom Video Communications is a video communications startup that rose to prominence in the aftermath of the epidemic. When schools switched to online learning, many teachers utilized the platform to conduct their online courses.
Zoom works with a wide range of companies. Zoom's fame skyrocketed in 2020 as the epidemic made it a household name. Even when schools and offices reopen, some schools have made the decision to remain permanently remote or to use a hybrid approach of in-person and online instruction.
The epidemic changed many people's ideas about online learning. While Zoom stock has cooled down since the early excitement, this is a positive indicator that this online education business still has a lot of room to expand.
Pearson
Pearson is the world's biggest education firm. In 1844, the corporation was started in London, England. Pearson serves schools, colleges, and institutions with materials, exams, and online services.
The firm is a global leader and innovator in educational goods and services for governments, educational institutions, and businesses. It has operations in approximately 200 countries throughout the globe and employs more than 20,000 people.
The corporation is divided into five business segments. Pearson has five major business segments.
Virtual Education
Higher Learning
English Language Instruction
Pearson is a well-known test creation, processing, and scoring company. There are over 300 professional examinations, as well as large-scale admissions assessments, accessible. The corporation claimed on its website.
We presently provide evaluations to about 300,000 professionals in the United States, including psychologists, speech-language pathologists, occupational therapists, and other experts in relevant disciplines. Our large-scale evaluations assist state, district, and school officials in making informed choices and assisting students in reaching their full potential. Pearson collaborates with schools and educational professionals at all levels to improve teaching and student results.
2U
Christophe Paucek, Jeremy Johnson, and John Katzman formed 2U in 2008. Over 230 university partners deliver undergraduate and graduate degree programs via the online education stock. Professional credentials, boot camps, and short courses are also available via 2U.
2U is high quality, giving an educational experience that is better than in person, according to Kent Syverud, chancellor and president of Syracuse University. It's really engaging, and that means a lot to us.
Over 3,600 digital programs are available via the firm. By working with premier colleges, 2U has reached over 42 million people. The University of Southern California was the company's first client in 2009. Major colleges like Georgetown, UC Berkeley, and Yale quickly followed suit.
Stride
Stride is a company that manages education. Virtual learning is offered as an alternative to traditional education or homeschooling. Schools may use the platform to augment and improve their students' learning in the classroom.
Stride was created to provide homeschooled students with a consistent curriculum. However, the company's objective has expanded significantly. Through tailored learning, the organization hopes to assist students of all ages in reaching their full potential.
Many parents worried about bringing their children back to school due to Covid-19 have been interested in Stride's cause. The technology is also useful for school districts looking for ways to build hybrid and in-person school reopenings.
With the introduction of the vaccination, schools are starting to reopen. For many students, though, online education has been the standard for the last year and a half. Many individuals are coming to consider it as a more convenient and secure alternative to traditional classroom instruction. Stride might be a fantastic long term investment as a result of this.
Tal Education
Tal Education is a Chinese education holding company. The platform is a prominent supplier of after-school tutoring services for students in grades K-12.
Tal Education provides tutoring services on a number of topics. Math, physics, chemistry, biology, history, geography, political science, and other subjects may all benefit from tutoring.
It provides students with tutoring services in three distinct learning modalities. Students have the option of taking small group classes, specialized premium services, or online courses.
You should be aware of the hazards if you decide to invest in this China-based education stock. Because of the regulatory crackdown, these equities have lately seen substantial volatility.
New Oriental
The biggest virtual educational service in China is New Oriental. And it's not an easy task - With 260 million pupils and 514,000 schools, China has the world's biggest education system.
The online education market has a diverse selection of educational programs, services, and goods. The platform is well recognized for its tutoring services for K-12 students. Private learning facilities, online education programs, and exam preparation services are among the other options available.
New Oriental announced a network of over 1,600 learning facilities and over 48,000 instructors in 104 locations as of February 28, 2021. According to the company's website, about 65 million students utilize the platform.
New Oriental was established in 2001 and has continued to expand since then. However, new restrictions in China's education, bitcoin, and tech industries have sparked some investment concerns. Last month, China's government announced a twofold reduction program. Tutoring and education service organizations must convert to charities as part of the laws.
Businesses will be unable to acquire cash or go public as a result of this, according to a Bloomberg article citing individuals familiar with the situation. Bloomberg said that public corporations would "likely no longer be able to invest in or buy education enterprises teaching school topics" and that "foreign money would also be restricted from the industry."
Coursera, Inc. (NYSE: COUR)
Coursera, Inc. (NYSE: COUR) is a company that provides online educational material. The company's quarterly sales surpassed $100 million earlier this year, raising the stock price by as much as 17%.
Raymond James raised Coursera, Inc. (NYSE: COUR) shares from Market Perform to Outperform in August, with a price objective of $45. The ratings were updated by Brain Peterson, an expert at the advice.
Twenty-five hedge funds in Insider Monkey's database owned positions in Coursera, Inc. (NYSE: COUR) worth $173 million at the end of the third quarter of 2021, up from 11 in the previous quarter's worth $52 million.
Coursera, Inc. (NYSE: COUR) is one of the companies gaining the attention of top investors, alongside Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Microsoft Corporation (NASDAQ: MSFT), and Alphabet Inc. (NASDAQ: GOOG).
The Company RingCentral, Inc. (NYSE:RNG)
RingCentral, Inc. (NYSE: RNG) is a provider of software-as-a-service. The corporation recently stated that it would pay Mitel, a communications company, $650 million in a strategic agreement to acquire patents in network management, security, and infrastructure.
RingCentral, Inc. (NYSE: RNG) analyst Ryan Koontz recently maintained a Buy rating on the stock and boosted the price target to $400 from $360, citing the company's strong third-quarter earnings report.
With 3.9 million shares worth more than $859 million, New York-based investment company Tiger Global Management LLC is a prominent stakeholder in RingCentral, Inc. (NYSE: RNG) among the hedge funds monitored by Insider Monkey.
In its Q2 2021 investor letter, Baron Opportunity Fund has the following to say about RingCentral, Inc. (NYSE: RNG):
"RingCentral, Inc. has been a portfolio holding for three years and continues to be a leader in the cloud unified communications-as-a-service (UCaaS) area, which encompasses phone, video, messaging, and contact center services. However, after reporting accelerating revenue growth for the third quarter in a row in the first quarter, RingCentral's stock began to fall on concerns about increased competition from both Microsoft Teams, with which RingCentral is a partner, and Zoom Communications, a former partner that has launched its own voice communications offering.
With the movement out of secular growth names and into cyclical, shares fell even more throughout the time. Given RingCentral's best-in-class UCaaS technology, including five-nines contractual service commitments (fully operational 99.999 percent of the time), which is orders of magnitude above its competitors; presence in roughly 40 countries; data governance and security requirements; number portability with all relevant domestic and international carriers; and positioning as the Gartner Mag The UCaaS industry is still in its early stages of development, with just approximately 3% of the roughly 400 million conventional corporate landline customers in use today using it. With its exclusive partnerships with legacy landline players like Avaya, Atos, and Alcatel, we believe RingCentral is in a strong position to capture a significant share of this market. This effectively gives it a "hunting license" for about half of the 400 million legacy seats, leveraging joint go-to-market efforts with each partner. RingCentral is well-positioned to deliver at least 30% top-line growth for the foreseeable future, as well as continually increasing operating margins and free cash flow creation."
The John Wiley & Sons, Inc. (NYSE: JW-A)
John Wiley & Sons, Inc. (NYSE: JW-A) is a New Jersey-based research and learning firm. It reported results for the first fiscal quarter in September, exceeding market expectations by $0.14 per share and $19 million in sales, respectively.
John Wiley & Sons, Inc. (NYSE: JW-A) has a solid dividend history and just announced a $0.345 per share quarterly dividend, which is consistent with past years. 2.59 percent was the forward yield. The company's market capitalization is close to $3 billion.
Cardinal Capital, a Connecticut-based investment company, is a major stakeholder in John Wiley & Sons, Inc. (NYSE: JW-A), with 1.6 million shares worth more than $85 million, according to Insider Monkey.
Houghton Mifflin Harcourt Company (NASDAQ: HMHC)
Houghton Mifflin Harcourt Company (NASDAQ: HMHC) is a Boston-based learning company. The stock has risen 381 percent year to date as the company outperforms profits projections and invests in expansion initiatives.
Analyst Jeffrey Silber of BMO Capital boosted the price target on Houghton Mifflin Harcourt Company (NASDAQ: HMHC) stock to $19 from $15 but maintained a Market Perform rating on the company citing "extremely solid" third-quarter results.
According to Insider Monkey, Engine Capital, a New York-based investment firm, owns 3 million shares in Houghton Mifflin Harcourt Company (NASDAQ: HMHC), valued at more than $40 million.
Laughing Water Capital LP, an asset management business, featured a few equities in its Q2 2021 investor letter, one of which was Houghton Mifflin Harcourt Company (NASDAQ: HMHC). Here's what the fund had to say:
"In the United States, HMHC is the main supplier of teaching resources for students in grades K-12. In brief, I believe the combination of a newly cleaned-up balance sheet, slimmed-down operating structure, Covid-induced acceleration of digital learning, and billions in the federal stimulus set to flood the education world has put HMHC in a position to gush cash over the next few years... but the market has failed to appreciate these changes. Given the impending influx of government stimulus funds, I believe it will be very difficult to lose money on this investment, and if the firm correctly reinvests this capital and the market realizes how this business has changed, there is a road to multi-bagger returns in the coming years."
Education Corporation Perdoceo (NASDAQ: PRDO)
Perdoceo Education Corporation (NASDAQ: PRDO) is a company that offers online education. The firm is one of the rare equities that has more than half of its market value in net cash yet is still selling at a discount.
Perdoceo Education Corporation (NASDAQ: PRDO) has reported third-quarter profits of $0.45 per share, topping expectations by $0.07. The total revenue for the quarter was $174 million, which was $3 million more than expected.
Nineteen hedge funds in Insider Monkey's database owned positions in Perdoceo Education Corporation (NASDAQ: PRDO) worth $89 million at the end of the third quarter of 2021, up from 18 in the previous quarter worth $99 million.
Universal Technical Institute, Inc. is a private corporation based in the United States (NYSE: UTI)
Universal Technical Institute, Inc. (NYSE: UTI) is an Arizona-based education services company.
Professional training courses for technicians in the automotive, diesel, collision repair, motorcycle, and marine sectors are available via the organization.
Universal Technical Institute, Inc. (NYSE: UTI) announced sales of $97 million for the fourth fiscal quarter on November 17, up 27 percent year over year and $1.7 million more than market expectations.
Park West Asset Management, a California-based investment business, is a major stakeholder in Universal Technical Institute, Inc. (NYSE: UTI), with 3 million shares worth more than $20 million, according to Insider Monkey.
Education's Current Trends
The COVID-19 epidemic threw the school system into disarray in 2020. Companies that provide virtual schooling and online educational material benefit from the transfer of students of all ages to online learning.
The reduction in college enrollment rates, which has averaged 1.67 percent each year since 2010, illustrates a longer-term trend in education. Microlearning – the consumption of instructional information in tiny modules of no more than 15 minutes — is becoming more popular as technology shortens attention spans.
Coursera (NYSE: COUR), an online platform that provides students complete control over their curriculums, and Cornerstone OnDemand (NASDAQ: CSOD), which purchased the microlearning market leader Grovo in 2018, are two other firms to explore.
Should You Invest in Educational Companies?
Several great education businesses may be winners in your portfolio. The best education stocks are those that have proved themselves to be adaptive and capable of continuing to expand despite industry upheavals.
Education Stocks: The Bottom Line
Education stocks are ideally positioned to profit from the sector's advancements. Although education may help diversify your portfolio, you should constantly be mindful of the hazards. In this case, research is crucial. Any investment has no assurance of return.
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