2. Bridgepoint Education (BPI) is a new entrant in the education market. Education companies, including Devry (DV) and Strayer (STRA), were outstanding investments in the recession and initial recovery, but they've recently been criticized by the press and are seeing increased regulation by the government. The stocks sold off sharply in 2010.
However, Bridgepoint remains a compelling growth story in this traditionally profitable industry. With 99% of students taking classes online, Bridgepoint has a lean cost structure and ample margins, due to inelastic demand for financial aid. Unemployment still near 10% abets the thesis for education stocks. However, declining enrollment is evident and expected to continue in 2011. Still, Morningstar is bullish.
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