For Profit Education Stocks Could Make the Grade

Local, State and Federal governments have never been great about providing public education in the United States. Tax dollars are going more towards buying the newest computers, flat screens, and smart boards. They are constantly embattled with teachers unions full of honest hard working teachers, but also a slew of mediocre educators who are only there because of the protection their union provides – hardly a well run system.

For profit education has emerged as a mainstay and is becoming a hot topic recently. It proposes to tackle the constant funding issues associated with public education. The ability to remove these expenses from the state and local governments could allow them to better allocate their finances to tasks they have comparative advantage towards. Private schools have long been in business in North America. This due in large part to religious affiliations. Catholic schools comprise the largest portion of schools behind public schools. These schools are funded by their respective churches or faith groups such as Judaism and Islam.

Although they are often inclusive, private schools do reserve the right to be exclusive, not found in public schools. This will become contentious as these schools gain more ground and we will likely see legislation challenging this facet once these schools become the go to.  They are also often exempt of unions, another contention with the general public.

Yes, I believe private schools will be the future of education at all levels. And I do see a way in for all students, many of whom are left out of their own public schools.  As an investor you can own a piece of the for profit education pie. If you do your homework and research, finding that for profit will play a larger roll in the future it would be who of you to pick up some of these great value stocks now.

Here are some of those stocks to check out:

DeVry, Inc. (DV)

• Likely undervalued and with worldwide presence
• Active Insider Selling and Options Exercise
• Dividend Payer

ITT Technical Institute (ESI)

• A mainstay offering cheaper and more practical education services for trades and specific careers
• Excellent Value Stock
• Favorable P/E just over 11
• Dividend Payer

Strayer Education (STRA)

• Has a large online presence
• Favorable P/E of 10
• Not Shy to Making Money Consistently

Apollo Group Inc. (APOL)

• More liberal arts degrees at the undergrad, masters, and doctorate levels
• Income Does not Meet Sales

Career Education Centers (CECO)

• Favorable long term prospects
• Excellent P/E
• Consistent Earnings

Corinthian Colleges Inc. (NASDAQ:COCO)

• Great Priced Penny Stock
• Currently Losing Money
• Strong Growth Prospects

It is important to note that these are not just education stocks in the most understood sense for replacing public education. Many have not reached that point. These stocks focus mostly on online learning, technical schools, community college, youth tutoring, home schooling, etc. Take the time to read up on a few you like. Most are small cap and micro cap with plenty of room to run. However, some investors argue the sector is flooded. Look for stocks with excellent foundations and identities with plenty of room for expansion. Obviously solid balance sheets make the grade!

Analysts and many CAPS members at the Motley Fool are starting to question the future of for profit education stocks. This is due in large part the enlarging student debt at +$1 trillion, currently more than credit card debt in the United States. Keep this in mind as it is likely post-secondary education will continue to come under fire and be challenged by alternatives – which could be these stocks. Look for those with emerging strategies and diverse solutions to education issues. Be mindful of those whose income does not match up well with sales.

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