A rundown of the best education stocks and (both online stocks & non-online) with the highest potential for profits this year.
The pandemic changed a lot of things over the past 2 years. Along with restrictions on mobility, and the disruption of supply chains, it has also brought to the foreground some outstanding innovations.
Although being able to communicate with people at a distance is nothing you in this day and age, the pandemic proved that entire companies, organizations, and yes, schools, can be run without people having to meet in one place.
Online learning, or remote education, is a trend that has been growing since before the pandemic. Many who consider the traditional forms of learning to be filled with unnecessary procedures often turn to remote education as an alternative source of learning.
With the pandemic though, the growth of online education has only accelerated, now becoming the norm for many people in many developed countries.
Market research by multiple analysts and firms estimates that the online courses market will grow at a rate of 29% till 2026, eventually reaching $18 billion in sales. This has led to rallying behind top education stocks as many investors are trying to cash in on the rapidly growing industry.
Top 7 Online Education Stocks
If you’d like to be one of these investors, then know that we’ve got you covered. In this list, we’ll explore 10 education companies, and take a detailed look at the top education stocks that market experts believe have the most potential for profits this year:
1. Chegg, Inc. (NYSE: CHGG)
Market Cap: $3.84 Billion
Chegg, Inc. is an American company that owns and runs a virtual learning platform. Established in 2005, the company provides both digital and physical textbooks, both for rent and purchase, online learning & online tutors, tutoring services as well as other student services. It was listed for public trading in the New York Stock Exchange back in 2013.
Though still somewhat small compared to several other platforms on this list, the company reported having almost 3 million subscribers to Chegg Services in 2020. More recently, they announced the opening of the University, a space for professors and other educators, a place to share content.
Should these endeavors prove fruitful, we can expect growth and profit to occur for the company around the middle of 2022.
Though these education stocks have not performed greatly as of late, the CEO, Dan Rosensweig, which he maintains is due to “short-term industry conditions rather than anything company-specific”. It seems he might be right since market analysts have given Chegg, Inc. a Market Perform rating with a price target of $49 per share. The shares of the company have gained by 274.28% over the last 5 years.
2. Stride, Inc. (NYSE: LRN)
Market Cap: $1.50 Billion
Formerly known as K12, Stride is a for-profit American company that provides both online education and blended education programs. Designed mainly to be an alternative to brick-and-mortar education, the company is considered to be one of the largest education management organizations (EMO) in terms of enrollment.
The stock of the company performed quite well in the past few months, partly due to the pandemic and partly due to the increased interest in its Career Learning segment. This has prompted many analysts to give the company’s stocks a Buy rating with a price target of $65.
This places us as one of the up-and-coming players in the online education industry should its current trajectory continue.
The stock prices for Stride have gained by 30.66% over the past 12 months and gained by 93.59% over the past 5 years. On top of that, there are 21 hedge funds currently investing in the company stakes worth $145 million as of the 3rd quarter of 2021.
3. John Wiley & Sons, Inc. (NYSE: JW-A)
Market Cap: $2.85 Billion
Commonly known as Wiley, this is a multinational publishing company with a history that dates as far back as the early 1800s. With a focus on academic publishing and instructional material, the company has made an effort recently to tap into the online education market. In 2021, John Wiley & Sons, Inc. acquired Hindawi, another publishing company.
Though the company already offers online education programs, virtual learning tools and materials for students, adults, and professors alike, it remains to be seen what other plans they have in store to keep up with the digitalization of the education market.
The main reason why Wiley is on this list is because of its higher-than-normal dividend yield. This company has loyally been paying out quarterly dividends which have been making income investors happy for decades. Currently, the dividend yield of John Wiley & Sons, Inc. is at 2.65%.
Among the 14 hedge funds investing in the company as of the 3rd quarter of 2021, Connecticut-based investment firm, Cardinal Capital, is the leading shareholder with 1.6 million shares worth more than $85 million.
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4. 2U, Inc. (NASDAQ: TWOU)
Market Cap: $1.22 Billion
One of the more philanthropic companies on this list, 2U is an American education technology company, based in Maryland, that contracts with non-profit colleges and universities to build, deliver and support online degree and non-degree programs. It caters mainly to both graduates and undergraduates.
Though it has yet to perform well in the stock market, many consider this company’s education stocks to be undervalued and that it’s only a matter of time before they soar meteorically. These hopes are not unfounded though since the company recently posted earnings for the third quarter, beating market estimates on earnings per share by $0.02. The revenue over the period was $232 million, up more than 15% year-on-year.
If the company manages to translate these revenues into its stocks, then there’s no saying how much the stocks can grow.
Among the 22 hedge funds reported to be investing in the country, New York-based investment firm ARK Investment Management is the leading shareholder with 8.4 million shares worth more than $282 million.
5. Coursera, Inc. (NYSE: COUR)
Market Cap: $2.64 Billion
A well-established online services platform, Coursera is definitely one of the largest and most widely known education platforms in the world. Its name has become almost ubiquitous when one talks about online learning and, with the increase of at-home learning, Coursera has seen an increase of customers from young learners to adults alike.
Early into 2021, the company crossed the $100 million in quarterly revenue, a landmark achievement for the company which boosted the share price by as much as 17%. This has also led analysts to classify the education stocks as Outperform and increase their price target to $45.
By the 4th quarter of 2021, Coursera had 25 hedge funds holding a combined stake worth $173 million, up from 11 in the previous quarter worth $52 million.
6. Zoom Video Communications, Inc. (NASDAQ: ZM)
Market Cap: $45.97 Billion
Though not an education company per se, the reason why Zoom Video Communications, Inc. is included on this list is that Zoom is one of the leading facilitators of online learning all around the globe. Any marked growth in the education industry is likely to result in growth for Zoom as well, it’s that simple.
Though growth for the company has been somewhat sluggish, management states that this is because they are currently focused on the launch of new products rather than the stock price. It remains to be seen though if those new products will translate to a growth in share prices.
The share prices of Zoom have gained by 138.89% over the past 5 years, quite nice even though the company does not offer any dividend for investors. The current rating for the company’s education stocks is Equal Weight with a price target of $245.
Among the 56 hedge funds investing in the company, New York-based firm Tiger Global Management LLC is the leading shareholder with 4.7 million shares worth more than $1.2 billion.
Bonus: Top 3 Non-Online Education Programs
7. RingCentral, Inc. (NYSE:RNG)
Market Cap: $16.27 Billion
Although the stocks of RingCentral are less than stellar as of the moment, the recent efforts made by the management have done great to renew investor confidence and generate excitement for the company’s future.
Another American company, RingCentral is a provider of cloud-based communications and collaboration solutions for businesses. It has also been a three-year portfolio holder and remains a leader in the cloud unified communications-as-a-service (UCaaS) space, which includes voice, video, messaging, and call center services — things that are essential for countless companies trying to deal with mobility restrictions.
Recently, the company has entered into a deal with the communications firm, Mitel, to pay $650 million for rights to patents covering network management, security, and infrastructure.
This has led analysts to maintain the Buy rating for its share with a price target of $400, although these education tocks have depreciated by -12.56% year-to-date.
There are 48 hedge funds holding shares of RingCentral. Of them all, the largest stakeholder would be the New York-based investment firm Tiger Global Management with 3.9 million shares worth more than $859 million.
8. Houghton Mifflin Harcourt Company (NASDAQ: HMHC)
Market Cap: $2.30 Billion
A rapidly growing company, Houghton Mifflin Harcourt Company is an education and learning company based in Boston. Known mainly as a publisher, they provide textbooks, instructional technology materials, assessments, reference works, and fiction and non-fiction for both young readers and adults.
The reason why they are classified as a rapidly growing company is that their stocks have gained by almost 300% over the past year alone. This has prompted analysts to raise the price target to $19 per share instead of the $15. The rating was maintained as Market Perform with notes that it had an exceptional 3rd quarter financially.
In a recent letter to investors by Laughing Water Capital LP, an asset management firm, talked about HMHC positively, stating that a “newly cleaned-up balance sheet, slimmed-down operating structure, Covid-induced acceleration of digital learning, and billions of dollars in the federal stimulus set to flood the education world has put HMHC in position to gush cash over the next few years…”
Of the 27 hedge funds investing in the company, New York-based investment firm Engine Capital is the leading shareholder in Houghton Mifflin Harcourt Company with 3 million shares worth more than $40 million.
9. Universal Technical Institute, Inc. (NYSE: UTI)
Market Cap: $238.90 Million
By far the smallest, though not the newest, company on this list, UTI is a private for profit education system of technical colleges throughout the United States. With the pandemic, it saw an increase in enrollments for their private educational services as many were looking to take up a new skill or change careers completely.
Catering mainly to adults, UTI offers professional training courses related to technicians in the automotive, diesel, collision repair, motorcycle, and marine industries.
Though the education stocks have not been performing well over the past few months, it is still on the green with gains of more than 20% over 12 months. There’s also a lot for investors to be optimistic about since, by the end of 2021, the company reported a revenue of $97 million, up 27% year-on-year and beating market predictions by $1.7 million.
Among the 12 hedge funds investing in the company, California-based investment firm, Park West Asset Management, is the leading shareholder in Universal Technical Institute with 3 million shares worth more than $20 million.
10. Perdomo Education Corporation (NASDAQ: PRDO)
Market Cap: $772.56 Million
When it comes to getting the most bang for your buck, the Perdoceo Education Corporation is a company that should be on your radar. It is one of the few companies on this list in the education sector with more than half of its total market capitalization in net cash and is still trading at relatively cheap prices.
It beat revenue predictions by $3 million in the 3rd quarter of 2021, earning a hefty $174 million. Though it is one of the smallest companies on this list, that only means there’s a lot of potential for exponential growth.
By the third quarter of 2021, 19 hedge funds were investing a total stake worth $89 million in Perdoceo Education Corporation, up from 18 in the preceding quarter worth $99 million.
And those were the top education stocks for you to look out for this year. We certainly hope that this article was helpful to you in your search for the next great investment.
Whether you're learning via online teaching, self taught learning, or otherwise, Education, after all, is important when trying to be knowledgeable about your investments and practice proper due diligence.
Armed with the right info, a rational attitude, and maybe a little luck, education stocks might just be the thing you need in order to graduate to larger profits. Happy trading!