Wednesday, July 16, 2008

Back to School Stocks

Last year, I wrote an article about the various publicly traded colleges and universities. However, there are other ways to play the education market.

Most high schools and colleges are starting their fall session in August and September so maybe it is worth taking a closer look at back to school stocks. One of the biggest expenses is a computer, with the primary choices being either an Apple (AAPL) MacBook laptop or a Dell (DELL) laptop. The primary choice for printers is the Hewlett Packard (HPQ). Whether your son or daughter has a Mac or PC, they all seem to use Microsoft Office, made by Microsoft (MSFT).

Apple Inc. has a price earnings ratio of 36 and a “price earnings to growth” ratio of 1.28. Dell has a forward P/E of 17 and a PEG of 1.14. Hewlett-Packard has a P/E of 14, a PEG of 0.89, and pays a small yield of 0.8%. Microsoft Corporation has a P/E of 16, a PEG of 1.24, and a yield of 1.7%.

The other big going-off-to-school expense is clothing. the Quiksilver Inc. (ZQK) brand is the clothing of choice for students who enjoy skiing, snow boarding, or surfing. The stock has a forward P/E of 9 and a PEG of 0.89.

Other students like Under Armour, Inc. (UA), which develops and markets microfiber apparel, such as sweats, T-shirts, socks, and baseball caps. The stock has a P/E of 30 and a PEG of 0.93. Nike Inc. (NKE), the famous athletic shoe manufacturer, is another company that benefits from the parents’ clothing budget. The stock has a P/E of 16, a PEG of 1.1, and a yield of 1.6%.

For college students, textbooks are a necessity but very expensive. In public high schools, the textbooks are usually purchased by the school districts. One of the recipients of these expenditures is Pearson plc (PSO), the United Kingdon based publisher of textbooks and related educational materials for colleges and universities, which has a P/E of 17, a PEG of 1.22, and a fairly high yield of 7.1%. Another publisher of textbooks is John Wiley & Sons Inc. (JW-A), which also publishes technical journals, medical journals, and integrated online learning resources for college students. They have a P/E of 18, and a yield of 1.2%.

Blackboard Inc. (BBBB) markets and services online teaching and learning environment software and has a huge share of the college and university market.. Professors use Blackboard as a repository for the class syllabus, the assignments and homework, presentations, tests, and discussion boards. Although the stock has an extremely high P/E of 145, and the PEG is 2.09.

For a list of all ten of the back to school stocks in an Excel format which you can sort, add to, and change, go to

Author owns MSFT and AAPL.

By Fred Fuld at

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