JBL: Big Dreams and Bigger Dollars
John Layfield
01/14/06 - 09:15 AM EST
In honor of Martin Luther King Jr. Day on Monday, I have a stock that is from a company that levels the playing field for kids in education.
Great people have great dreams. Martin Luther King and Rosa Parks had a dream of ending segregation. Some companies have great dreams too.
Educate Inc. (EEEE - Cramer's Take - Stockpickr) has a dream of providing a service that helps kids achieve their academic goals. I just have a dream of making money. That's why I recommend this stock.
Educate Inc. provides a great service to our education system. Schools are understaffed in most places; they simply don't have the manpower to work one-on-one with very many students. This is where Educate comes in.
The company provides tutorial services through learning center franchises throughout North America, Canada and Europe. Kids that normally would fall through the cracks can get special tutors that public schools cannot provide. The learning centers also help kids prepare for college entrance exams in the highly competitive upper-education field.
Educate also has government-funded contracts to provide supplemental education services and special needs service through public and private schools.
Now to my dream of making money: Educate is growing like crazy. Formed in 2003, Baltimore-based Education Inc. is North America's largest franchiser of learning centers, with its Sylvan Learning Centers also in Canada and the Europe. Its products include the popular
Hooked on Phonics series.
Educate has a projected growth rate of more than 20% with a forward looking multiple of less than 20, based on consensus EPS estimates of 71 cents. With a P/E-to-growth ratio under 1, this stock is cheap.
Educate is the market leader with great growth prospects. Given the political climate we have, it is certain to grow. It's very simple; the last thing a politician will do is cut government contracts to a service that helps our youth. That would be political suicide.
To view John Layfield's video take of this celebrity investor column, click here.
On a very grass-roots level of due diligence I called my sister, Sylvia Sims, who teaches school in Sweetwater, Texas. She told me the service provided by Educate is invaluable to the education system.
This is a boring company. There's nothing fantastic about its numbers; it just continues to grow. I think it is a company you should buy. I do not currently own shares of Educate, but as a guy who speaks and understands Presidential English, I would enjoy owning an education play.
News, News and More News
The State of Maryland just made one of the worst decisions for big business possible. It voted to override the veto of Gov. Robert Ehrlich Jr. on the so-called
Wal-Mart (WMT - Cramer's Take - Stockpickr) Bill. The bill states that companies with more than 10,000 employees have to pay 8% of payroll toward health care.
This bill is flawed on so many levels, but on the one that affects investors is that it hurts business. I
recommended Wal-Mart in mid-October; but, with this ruling and lower-than-expected Christmas sales, the stock is now basically the same price as when I recommended it. I still own my shares of Wal-Mart, and I am not selling them. However, I would not be a buyer here until we see how this plays out nationally. So far it is great news for unions, bad news for business.
Everybody Wants a Bad Company
I also
recommended Boston Scientific (BSX - Cramer's Take - Stockpickr) in October, and it is now up just slightly due to concerns over a potential bidding war with
Johnson & Johnson (JNJ - Cramer's Take - Stockpickr) for
Guidant (GDT - Cramer's Take - Stockpickr).
J&J first made a bid of $76 per share for Guidant, and then lowered it after a series of recalls of pacemakers and defibrillators. J&J lowered its bid to $63. Boston Scientific jumped in and the bidding has begun for a troubled company. The bids now stand at $73 a share by Boston Scientific and $68 a share by J&J.
Boston Scientific and J&J both want a stake in the $10 billion market for devices that help keep heart beats normal.
I like Boston Scientific with or without the acquisition. I own shares of the company and plan on keeping them.
Accolades for an Acolyte
Besides being the former (I hate that adjective) WWE Champion, I am also a former three-time WWE Tag Team Champion along with Ron Simmons, a.k.a. Faarooq.
Ron Simmons was the first black heavyweight champion in WCW wrestling history and was just inducted into the Orange Bowl Hall of Honor for his college football record. Ron was actually in the Heisman voting as a nose tackle; Bobby Bowden said Ron was the greatest football player he ever coached at Florida State University.
Congratulations to my very best friend Ron Simmons -- you deserve the honor.
Remember:
Being poor is bad, staying that way is stupid.
