Education is a Good Investment, How about Education Stocks?

OK, class, listen up! Benjamin Franklin said “An investment in knowledge always pays the best interest.â€? Most people agree that education is a great investment. But is there a way to invest in the education field? Fortunately, there are several stocks available to study up on. Private equity already has with the takeover of Laureate Education Inc. (LAUR) by its founder and CEO along with an investment consortium. You can follow up on the performance of these stocks at stockpickr.com to see if they make the grade.

By far, the largest in terms of market cap is the Arizona based Apollo Group Inc. (APOL), which trades on NASDAQ. This higher education company owns The University of Phoenix, Inc., Institute for Professional Development (IPD) and The College for Financial Planning Institutes Corporation (College), and Western International University, Inc. (WIU). The company has 100 campuses and over 150 learning centers throughout the United States, Canada, the Netherlands, and Mexico. Here are some of its good grades and bad grades in a nutshell.

Positives
1. Reasonable P/E 19.4
2. Return on assets 33%
3. Return on equity 62%
4. No long term debt
5. A reasonable PEG of 1.25, lower than the industry average of 1.56
6. Operating margin is 27.4%, higher than competitors
7. Owned by Seth Klarman’s Baupost Group

Negatives
1. P/S is fairly high at 3.2
2. Quarterly earnings growth was a drop of 11.6%

Career Education Corporation (CECO), another NASDAQ stock, offers higher education in the U. S., Canada, France, the United Kingdom, and the United Arab Emirates. They also own American InterContinental University Online, Colorado Technical University Online, Le Cordon Bleu Schools North America, the Harrington College of Design, the Brooks Institute of Photography, the Katharine Gibbs Schools, and Sanford-Brown Institutes and Colleges. P/E 63, P/S 1.8.

Corinthian Colleges, Inc. (COCO), which also trades on NASDAQ, operates 45 diploma-granting schools, 14 degree-granting colleges, 33 colleges in Canada, and two online schools, FMU Online and Everest Online. P/E 44, P/S 1.2.

DeVry Inc. (DV), which trades on the New York Stock Exchange, is one of only two stocks on this list that pays a dividend, albeit a small one. They own DeVry University, Ross University, Deaconess College of Nursing, and Becker Professional Review. P/S 30, P/S 2.2.

ITT Educational Services Inc. (ESI) also trades on the New York Stock Exchange, operates 88 ITT Technical Institutes throughout the United States. P/E 29, P/S 4.3.

Capella Education Company (CPLA) owns and operated Capella University. Quarterly revenue growth 20%, quarterly earnings growth is 90% year over year. Sells at about 90% of book value. This appears to be a possible takeover candidate. P/E 31, P/S 2.9.

Strayer Education, Inc. (STRA) operates Strayer University which has 47 campuses in the eastern United States. This is the other stock on the list that pays a dividend, about 1.1%. P/E 32, P/S 6.4.

Now do your homework!!! Do what your coaches have taught you. Look at the charts. Are they in an up trend or down trend? Go to www.moneycentral.msn.com and do your fundamental analysis. Do they meet the parameters that your coaches set as benchmarks? If so, add them to your watch list. Look at each chart. Perform a quick technical analysis on each stock. Do you see any entry points, exit points? Where’s support & resistance? What do your indicators say?

This type of questioning should become a habit. Every time someone says “Hey Charlie, here’s a stock for you!� or anytime you read a stock recommendation from someone else, DO YOUR HOMEWORK…form your own opinion. Take ownership for your investment decisions. Know the questions, ask the questions and really know the answers.

Leonardo da Vinci said,�First study the science, and then practice the art which is born of that science.�

See your trade. Know the risk. Manage your trade. Trust your chart. Pull the trigger! Execute the trade. Take your profits; take what the stock will give you. Practice taking profits. In this volatile market you can not sit on winners. Do not let your emotions (greed) turn a winning trade into a losing trade. You can always trade back into a position. Learn to sell. Most unsuccessful traders are unsuccessful because they do not learn to take a profit. Be proactive not reactive. Bottomline…Let’s make money!!!