Monday, December 23, 2013

Are For-Profit Education Stocks a Smart Idea for Your Portfolio?

Contrarian investors looking for depressed stocks might want to educate themselves on for-profit college stocks, the companies that own and operate private colleges and post-secondary schools for a profit. Although the SandP 500 has risen by well over 40% during the last couple years, major companies in this industry, such as Apollo Group (APOL), have dropped by over 50% during the same time frame. These stocks, which have suffered due to stronger government regulations and dropping enrollment, appeared to have bottomed out during spring of this year.

Lots of For-Profit College Stocks

The bad news is out on these stocks, so there may be an investment opportunity with these companies. According to the list of education stocks at, there are over 30 for-profit school stocks, with more than half a dozen that pay dividends.

Debt-Free, Lots of Cash, Pays a Dividend

 One stock that generates a yield is DeVry Education Group (DV), which provides investors with a yield of 1.9%. DeVry owns colleges, universities, and other educational institutions around the world. The stock trades at 14.2 forward earnings. Although revenues for the latest quarter down 6%, the company generated earnings of $1.05 per share. The company is debt free and has over $311 million in cash, amounting to $4.93 in cash per share.

5% Yield

National American University Holdings (NAUH) is one of the highest yielding stocks in this arena, sporting a yield of 5.1%.  The stock trades at 13.9 times forward earnings. Revenues for the latest quarter were up 5.0%, and earnings per share were 0.21 per share.

17.3% Increase in Earnings

Although Capella Education Co. (CPLA) doesn't pay a dividend, the earnings are favorable with a forward price to earnings ratio of 22.5. Quarterly revenues rose 1.4% with a 17.3% boost in quarterly earnings per share.The company has no debt and $12.21 per share in cash.

More For-Profit School Stocks

If you want a free list of for-profit education stocks, which includes the PE ratio, the forward PE, the PEG, and the yield, go to

Disclosure: Author didn't own any of the above at the time the article was written.


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