One of the major developments stemming from the Covid-19 crisis was the digitalization of myriad in-person functionalities, which may carry significant implications for remote learning stocks. While the underlying practice has been available for some time, the pandemic pushed the narrative to the forefront. Now, it’s possible that this niche of the digital economy will spread its wings.
According to Statista, analysts project that the online education market will print revenue of $87.51 billion by the end of this year. Even better, the ecosystem could expand at a compound annual growth rate (CAGR) of 11.05% through 2028. At the forecast culmination point, this sector may command a market volume of $133.1 billion.
Further, the impact that teleconferencing has had on the professional workforce means that learning may increasingly take place in the digital realm. Therefore, forward-looking investors may want to consider the below remote learning stocks.
New Oriental Education (EDU)
Headquartered in Beijing, China, New Oriental Education (NYSE:EDU) is a provider of private educational services in its home nation. Per its public profile, New Oriental is the largest comprehensive private educational company in China based on the number of program offerings, total student enrollments, and geographic presence. With international competition in the academic world only heating up, EDU ranks among the most compelling remote learning stocks.
According to data compiled by Statista, the market revenue of the K-12 education industry in the world’s second-largest economy clocked in at $925.1 billion yuan or very roughly $130 billion based on current exchange rates. Following a rough patch in 2020 and 2021 due to the COVID-19 crisis, the sector is projected to only grow from the pandemic-related doldrums. That puts New Oriental in a prime position to benefit.
Adding to the bullish narrative, EDU trades at 6.93X free cash flow (FCF), a discount compared to the sector median of 13.72X. Lastly, analysts rate shares a unanimous strong buy with an $84.58 average price target.
Stride (LRN)
Based in Herndon, Virginia, Stride (NYSE:LRN) is a for-profit education company that provides online and blended education programs. Per its corporate profile, Stride offers online education design as an alternative to the traditional “brick and mortar” curriculum for public school students. The targeted range includes students from kindergarten through 12th grade. In addition, the company provides career learning programs.
While 2023 probably go down as the year of artificial intelligence, Stride offered anyone paying attention more than enough food for thought. In the past 52 weeks, LRN returned almost 85% of equity value. Over the past five years, it’s up 131%, demonstrating the upside potential of remote learning stocks. Also, with the company’s innovative approach to game-based learning, it’s possible that LRN could eventually become an AI-related play in its own right.
Enticingly, even though shares skyrocketed last year, they’re trading at a price/earnings-to-growth (PEG) ratio of only 0.65X. That’s lower than 63.22% of Stride’s peers. As well, analysts peg LRN a strong buy with a $66.75 price target.
Grand Canyon Education (LOPE)
While not a pure-play idea among remote learning stocks, Grand Canyon Education (NASDAQ:LOPE) deserves a closer look. According to its website, Grand Canyon is “Arizona’s premier Christian university committed to making a private education affordable.” It belongs on this list thanks to its online and on-campus undergraduate and graduate programs. It also partners with other universities and colleges to provide additional online education programs.
Fundamentally, LOPE should be appealing for those who believe in the future of remote learning stocks. A sector that may have once been met with skepticism, online higher education has become increasingly popular. Notably, Forbes pointes out that in 2021, about 60% of all postsecondary degree seekers in the U.S. took at least some online classes. As this framework becomes more normalized, this metric could easily expand.
Based on its trailing-year earnings multiple of 19.7X, LOPE is fairly valued. But thanks to its above-average long-term revenue growth and consistent profitability, shares may have more room to run. Finally, Grand Canyon enjoys a unanimous strong buy rating with a $145.67 price target.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
