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10 Education Stocks to Buy for the Fall School Season

These academia plays should make you smarter and more profitable

education stocks - 10 Education Stocks to Buy for the Fall School Season

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In the coming months and years ahead, perhaps no other sector will face as significant of a change as education stocks to buy. As you know, the novel coronavirus imposed immediate changes to academia, completely disrupting the spring semester. Now, educational institutions are scrambling for answers while still addressing the present threat of Covid-19.

On the surface, investors may view education stocks, particularly those levered to online platforms, as no-brainers. Certainly, the fundamental narrative makes sense. Again, the pandemic forced an immediate shut down of academic institutions. However, they couldn’t just let their students, particularly the youngest ones, miss out during the critical years of their development. Thus, the rise of online learning took on far greater significance.

Still, the Wall Street Journal poured cold water on this story as a catch-all catalyst for education stocks to buy. In rather blunt terms, contributors Tawnell D. Hobbs and Lee Hawkins declared that remote learning simply didn’t work. While there are several factors that contributed to this alleged failure, one of them is that the process was much more stressful for teachers.

Without visual cues, the loss of physical interaction with students prevented educators from effectively doing their job. As well, the ensuing shutdowns from the coronavirus wasn’t a vacation period for working parents. If they didn’t perform their professional duties, it could potentially lead to unemployment. Obviously, that’s not going to fly during an economic crisis. And with kids running around, this dynamic compounded parental pressures.

Despite some of the glaring issues with academia in a coronavirus-impacted world, investors may still have an opportunity with education stocks to buy. Don’t get me wrong: this is a tough segment. But all nations have a vested interest in bolstering their academic institutions. Therefore, it’s very possible that these ten companies could benefit:

  • K12 Inc. (NYSE:LRN)
  • Chegg (NYSE:CHGG)
  • Microsoft (NASDAQ:MSFT)
  • TAL Education Group (NYSE:TAL)
  • New Oriental Education & Technology Group (NYSE:EDU)
  • Universal Technical Institute (NYSE:UTI)
  • Bright Horizons Family Solutions (NYSE:BFAM)
  • Grand Canyon Education (NASDAQ:LOPE)
  • American Public Education (NASDAQ:APEI)
  • Adtalem Global Education (NYSE:ATGE)

Finally, the learning sector isn’t just for kids. As you’ll see from this list, the companies featured cut a wide spectrum. So, if you want to get ahead of the class, consider these education stocks to buy.

K12 Inc. (LRN)

a clipboard with the words "k-12 education" written on a yellow piece of paper and in red marker
Source: Shutterstock

Even before the pandemic upended our society, K12 had strong appeal for concerned parents. You see, American education is lot different than some of the black-and-white footage that we saw from decades past. Nowadays, students must deal with all kinds of pressures, including the ever-present risk of violence.

Frankly, the sad developments in our country would make any parent consider home-based education; hence, the upside catalyst for LRN stock.

But during this pandemic, I’m sure more parents are exploring what K12 has to offer. As an online education specialist, the company provides tailor-made learning that’s very difficult, if not impossible to duplicate anywhere else. Plus, the digitalized element provides reassurance, boosting the case for LRN stock.

While the WSJ may not have much confidence in online learning, it could also be the future in a post-pandemic world. Thus, parents may want to give their kids a head start in this department should this forecast materialize. If so, you’ll want to keep K12 on your list of education stocks to buy.

Chegg (CHGG)

Chegg (CHGG) logo on the company's web page magnified by a magnifying glass
Source: Casimiro PT / Shutterstock.com

As every college student knows, higher education is an expensive endeavor. It’s not just about the tuition, although obviously this is the backbreaker for many who graduate with student loan debt. In addition, the number of books you must buy can be onerous. And let’s face it — some professors are maniacal about their reading requirements.

Fortunately, students in this day and age can depend on Chegg to at least help out in the books department. According to Chegg’s website, they can save up to 90% off textbooks, which can be a lifesaver for many. As well, CHGG stock is levered to an online tutoring service, which can be accessed anytime you need help.

Honestly, I believe this concept is underappreciated by many investors. You’ll be surprised at how many students fall through the cracks simply because they lacked a key piece to the puzzle. With Chegg, students can enjoy judgment-free assistance, which should provide a long-term lift for CHGG stock.

Microsoft (MSFT)

Image of corporate building with Microsoft (MSFT) logo above the entrance.
Source: NYCStock / Shutterstock.com

Microsoft is rarely considered a candidate among education stocks. In fact, because of its Xbox console, Microsoft is more responsible for slacking off than learning. Nevertheless, if remote learning becomes increasingly integrated into our post-pandemic society, you’ll want to keep close tabs on MSFT stock.

If you do a Google search for education stocks, chances are, you’ll come across Zoom Video Communications (NASDAQ:ZM). Again, Zoom isn’t considered a pure education play, but it facilitates online learning. Therefore, the descriptor is accurate.

Still, Zoom has lingering issues. At first, the platform suffered security problems. More recently, it has suffered from outages, which poses problems for the many institutions that depend on Zoom. To quickly share a personal story, when CGTN America asked me to come on as a guest expert on the firearms industry, we used Microsoft-owned Skype to communicate.

Bottom line, I’m not sure if Zoom will be relevant 10 years down the line. I’m absolutely confident that Microsoft will be around and thriving. Therefore, I like MSFT stock.

TAL Education Group (TAL)

High angle view of an artist drawing something on graphic tablet at the office.
Source: Shutterstock

Due to the novel coronavirus, China isn’t a very popular topic. Therefore, by negative association, TAL stock is risky. While I understand the concerns many Americans have, I’ve got to call out some blatant hypocrisy.

For one thing, China didn’t become a communist nation yesterday. So, the real anger should be directed at American companies and politicians who directly or indirectly offshored American jobs to foreign countries. As well, look up the definition of capitalism. If private owners of the means of production want to do business in China to maximize profits, isn’t that incredibly capitalistic of them?

Anyways, those who are politically agnostic about their portfolio should consider TAL stock. For those not in the know, TAL is similar to Kumon learning centers.

But the takeaway here is that Chinese parents loves their TAL learning centers. Thus, you’ll want to put this high on your list of education stocks to buy.

New Oriental Education & Technology Group (EDU)

a child in front of a laptop taking notes while viewing an online class
Source: Shutterstock

According to New Oriental Education & Technology Group’s website, “our mission is to inspire Chinese students of all ages to improve their lives and expand their horizons through a lifelong commitment to learning.”

Whether you’re a strong believer in this claim or not, American investors ought to consider taking a shot at EDU stock. Bluntly speaking, this is one of those education stocks where you can profit from the east-west cultural divide. What I mean is that the Chinese love to think long term. Here in America, we love to eat cheeseburgers and French fries.

It’s a huge gulf, believe me.

Also, academia represents a pivotal cog in China’s intention to dominate world affairs. No, this isn’t a Covid-19 conspiracy theory. Rather, FastCompany.com sounded the alarm roughly a year before the pandemic struck the U.S.

Sadly, I think the Chinese have us licked in this department. But you can turn that frown upside down with EDU stock.

Universal Technical Institute (UTI)

several text books stacked up on each other
Source: Shutterstock

The bullish case for Universal Technical Institute can be summed up by the legendary Edwin Starr, who once sang, millennials … what are they good for? Absolutely nothing!

Wait a minute. I’m sorry. I wasn’t understanding the words coming out of his mouth. That song was about war. Nevertheless, the sentiment is still valid.

Multiple reports indicate that young people are not resourceful with day-to-day situations that may arise. Indeed, I had a conversation with an older friend who is a master plumber. He said something I’ll never forget: the modern American male is the best thing that has ever happened to his industry.

In other words, blue collar is the quickest, easiest path to individual financial success. And that means you should consider trade schools like Universal Technical Institute among your targeted education stocks.

Further, it’s not just about a streamlined career path that bolsters UTI stock. Instead, not everyone likes white-collar work. Some folks need to get their hands dirty and Universal Technical Institute provides that opportunity.

Bright Horizons Family Solutions (BFAM)

a girl sitting in front of a laptop working on homework
Source: fizkes / Shutterstock.com

As the largest provider of employer-sponsored childcare, Bright Horizons Family Solutions was critically relevant for busy parents during the pre-pandemic era. Following the devastation of the coronavirus, BFAM stock initially plummeted. Even now, shares are well off from their February highs.

It’s easy to see why investors have been jittery. With millions of people now working from home, the potential destruction of demand was worrisome for BFAM stock. Although I acknowledge the risk, contrarians may want to consider this among their speculative education stocks.

First, not everyone is working from home. Obviously, frontline workers must operate in the field. But they’re humans too, meaning that someone must look after their kids; hence, Bright Horizons. Also, it’s possible that the work-from-home phenomenon may fade in the months ahead.

As the WSJ reported in another article, at least some companies are rethinking remote work due to inherent productivity issues. Therefore, the bold may benefit from this contrarian tale.

Grand Canyon Education (LOPE)

a woman dressed in a graduation gown holding dollar bills
Source: Shutterstock

It’s not just China-based education stocks that are suffering from negative associations. Faith-based or faith-centered institutions like Grand Canyon Education may take some heat due to an ugly incident involving former president of Liberty University, Jerry Falwell Jr.

I’m not going to detail what happened as the Falwell situation is disturbing for even non-faith practitioners. Needless to say, the scandal may have done irreparable damage to the reputation of religion in America.

Getting that bad news out of the way, I still like LOPE stock. Here’s the reality — we’re living in a society that has become disconcertingly callous. Personally, I believe much of the violence and conflicts in this nation stem from this callousness.

Therefore, what I appreciate about LOPE stock is the underlying ethos: Grand Canyon is about education with a purpose. We need more of that, not less. If you can handle the volatility — and don’t get me wrong, this is a volatile play — you can feel good about putting your money in LOPE.

American Public Education (APEI)

a female student holding a laptop
Source: HP

Billed as a higher education provider for adult learners (the average age of students here is 30 years), American Public Education faces perception challenges due to Covid-19. With so much disruption occurring in society, along with severe economic pressures, adult students are incentivized to work, not go back to school. Thus, APEI stock has been choppy in the past few months.

Clearly, this is not one of the education stocks for conservative investors. But if you’ve got the stomach for it, American Public Education has a compelling narrative. Namely, the pandemic has accelerated the disparities between those who have a college education versus those who don’t.

According to the latest economic data, the national unemployment rate is 8.4%. But those with a bachelor’s degree or higher have an unemployment rate of 5.3%. That’s huge. It also proves why investing in education or training is rarely wasted.

In addition, APEI stock is attractive because the underlying company doesn’t throw its students into unmanageable debt. According to American Public’s website, 72% of its institutions’ students graduate without debt incurred from the company.

Adtalem Global Education (ATGE)

a student working on a laptop
Source: Microsoft

Given the choppiness and recent volatility, Adtalem Global Education is the riskiest name in this list of education stocks; thus, I’m putting it dead last for a reason. However, if you want the highest upside potential, ATGE stock may have something for you.

Fundamentally, Adtalem focuses on the medical and healthcare space. As you very well know, this is a high-demand sector. Perhaps young students who are experiencing this pandemic may be inspired to pursue a career in medicine. Therefore, over the long run, you could see sentiment rise substantially for ATGE stock.

At the same time, the manner in which we addressed the pandemic leaves much to be desired. As well, the lack of critical protective equipment left observers bewildered. How could we expect our frontline workers to give us their best when they don’t have the basic supplies to protect themselves?

I can see both sides of the issue here, which is why it’s so risky. Nevertheless, if you’re a gambler, ATGE is on a discount.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


Article printed from InvestorPlace Media, https://investorplace.com/2020/09/10-education-stocks-to-buy-for-the-fall-school-season/.

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