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One Life to Educate
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While trying out the Morningstar stock screener recently, I ran into an interesting trend. One screen variation brought up Strayer (STRA) a private college which has been doing OK recently. STRA's Yahoo headlines featured a story explaining that for-profit education stocks tend to outperform the market during a slower economy and sluggish labor market. This makes sense. When someone is laid off in a declining industry he'll go back to school to retrain for another field. Searching Yahoo for STRA's competitors I developed the following list: Over the last year, YTD, 6 mo., 3 mo. and 1 mo. the price of every, single one of these stocks has been up! Moreover, all but CECO were up over the last 2 years; and CECO wasn't down by much. All but COCO were up over the last 3 years. (COCO has had some ups and downs.) A slightly different category is a Chinese-based school: New Oriental Education & Technology Group (EDU) 2.87B Mkt.Cap. This school hasn't been traded for very long, at least not in the US, but the stock has soared during that time. A smaller company, Lincoln Educational Services Corp. (LINC) 349.91M Mkt.Cap., has not enjoyed the same rise in stock as the larger companies but is perhaps also poised to make money in a slower economy. Another smaller company, Princeton Review, Inc. (REVU) 221.19M Mkt.Cap., is in a similar category. REVU does hold classes but is more in the area of training students to pass tests, producing supplements to education and supplying materials for classes. REVU's stock, unfortunately, has had ups and downs. However, this led me to wonder if a really large textbook publisher might not reflect the same profits as educational institutions. But no, McGraw Hill (MHP) 17.50B Mkt.Cap. and Pearson plc (PSO) 12.40B Mkt.Cap. have not enjoyed the same immunity to bears as the private schools. Why have the larger schools been doing so well, not just during the recent bear market but longer-term? Could it be that the Boomer generation is retraining at night, looking forward to a second career after retirement? Maybe I am onto something here! Last Minute Strategy Lab Fund Note: Bad news caused me to sell steel maker PKX. Hopefully it will sell quickly enough, and sink slowly enough, that it will keep a little bit of the profit it showed while I held it. To keep metal in the fund, I bought Freeport McMoran Copper and Gold (FCX) which I'd added to my prospect list after the Morningstar Screening. | ||
