3 Online Education Stocks Investors Should Study
A study conducted by Global Market Insights (GMI) concluded that the global e-learning market will grow 20% annually over the next seven years and cross the $1 trillion mark by...
A study conducted by Global Market Insights (GMI) concluded that the global e-learning market will grow 20% annually over the next seven years and cross the $1 trillion mark by 2028. Even faster growth is forecast for the Asia Pacific region and India.
This suggests that the surge in online learning demand caused by Covid-19 only kickstarted what is expected to be a multiyear shift in the way we learn.
As high-speed Internet access reaches more corners of the world, more people will be able to access e-learning platforms to advance their education. More courses will be taken, more degrees will be earned, and more employee training will be completed through remote learning experiences as the decade progresses.
The anticipated growth has industry incumbents and new challengers clamoring to get a piece of the pie. Product offerings, teacher hiring, and technological advancements are expanding rapidly.
You wouldn't know this is a hot area, however, by how online education stocks are performing. The education and training services group is down another 20% year-to-date after plunging more than 70% from its 2021 pandemic-fueled peak.
The industry has fallen woefully out of favor amid a flood of competition and tough year-over-year comparisons. This has presented an opportunity for investors who comprehend the long-term growth trajectory in e-learning.
Gaining knowledge about which stocks to buy should involve studying these three companies.
What is a Good Education Technology Stock?
2U, Inc. (NASDAQ: TWOU) is a provider of cloud-based software that enables non-profit colleges and universities to educate students remotely. In addition to this technology, it offers a range of undergraduate and graduate degree programs of their own.
The company's bread and butter though is helping educational institutions convert their course materials and expertise into online learning solutions that address the needs of the modern college student. 2U is best known for its free-to-degree programs that let students earn degrees and certificates without stepping foot on a college campus.
Last week 2U reported a 9% increase in first-quarter revenue but a net loss that nearly doubled to $18.5 million. A 35% increase in costs was largely related to one-time, non-cash charges but also increasing operating expenses to support growth plans.
2U's growth initiatives are built around the integration of the recently acquired edX. Over time, the company aims to expand its 4,000-plus offerings to assert itself as the preferred digital transformation partner for universities worldwide.
What Does Adtalem Global Education Do?
Adtalem Global Education Inc. (NYSE: ATGE) is the company behind a half dozen online, on-campus, and hybrid universities focused on healthcare. Chamberlain University offers nursing programs while three separate schools offer degree and non-degree programs in medicine, including veterinary medicine. Then there's the recently acquired Walden University which has added over 100 online certificate and degree programs in healthcare.
The company's expanding portfolio is helping healthcare employers meet their critical workforce needs at a time when front line medical professionals have evolved into everyday heroes. Although student enrollments have slowed of late due to Covid-related challenges, over time Adtalem expects that demand for healthcare professionals will outrun supply as has historically been the case. The rising demand is expected to draw more people to the profession and in turn create steady demand for the company's diverse healthcare offerings.
Analysts are expecting Adtalem's earnings per share to climb above $3.00 for the first time in 2023. This means the stock can be had for around 10x next year's earnings estimate, a small price to pay to gain access to healthcare education spending in the post-pandemic world.
Is Strategic Education Stock a Buy?
Strategic Education, Inc. (NASDAQ: STRA), or SEI, is the parent company of Strayer University, home of the famous Jack Welch Management Institute MBA program. The for-profit online institution was founded more than a decade ago by former General Electric CEO Jack Welch along with his wife Suzy, a well-known author. It is also the company behind the New York Code and Design Academy, a popular destination for career-minded students interested in software development.
While most of SEI's revenue comes from within the U.S., nearly one-fourth comes from the Australia/New Zealand market where online learning is also growing rapidly in the wake of repeated Covid lockdowns. As has been a theme in e-learning, decreased enrollment figures compared to 2021's extraordinary growth has caused short-sighted investors to exit the space. SEI shareholders have experienced the same with enrollments down 13% last quarter and the stock down sharply from its Covid peak.
The good news is that investors with a long view can pounce on a leading online education player with strong assets and financials. SEI's cash position has already jumped 8% this year giving it ample liquidity to pay the bills and invest for the future. The company is also one of the most shareholder-friendly education names with an active buyback program and 3.7% forward dividend.
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