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TheStreet Open House

For Investors, It Pays to Skip School Stocks

5. Strayer Education (STRA)

Company profile: Strayer, with a market value of $1 billion, is a for-profit educator with 92 campuses in 21 states, and serves students in all 50 states and 30 countries through its online programs. It has a wide range of degree programs.

Investor takeaway: Its shares are down 12% this year and have a three-year, average annual loss of 20%. Analysts give its shares one "buy" rating, three "buy/holds," nine "holds," and one "weak hold," according to a survey of analysts by S&P.

4. Bridgepoint Education (BPI)

Company profile: Bridgepoint, with a market value of $1.1 billion, offers associate to doctoral degrees in the areas of business, education, psychology, social sciences, and health sciences. Although it has two campuses, one in Iowa and the other in Colorado, it serves about 99% of its roughly 87,000 students online.

Investor takeaway: Its shares are down 7.4% this year, but have a three-year, average annual return of 22%. Analysts give its shares two "buy" ratings, four "buy/holds," and four "holds," according to a survey of analysts by S&P.

For its current fiscal year, the company projected student growth this fiscal year of about 10% and has been impacted by the tougher government standards. Last year enrollments grew by 11% after growth of 45% in 2010 and 70% in 2009.

3. ITT Educational Services (ESI)

Company profile: ITT Educational, with a market value of $1.5 billion, is a for-profit post-secondary education provider serving more than 88,000 students at its ITT Technical Institute and Daniel Webster College. It has 126 campuses and four learning centers in 38 states.

Investor takeaway: Its shares are up 5% this year, but have a three-year, average annual decline of 17%. Analysts give its shares three "buy" ratings, two "buy/holds," nine "holds," and two "sells," according to a survey of analysts by S&P.

For fiscal 2012, analysts expect it will earn $7.96 per share, and earnings will decline 6% next year to $7.51 per share.

2. DeVry (DV)

Company profile: DeVry, with a market value of $2 billion, is a diversified for-profit education company offering undergraduate and graduate programs in business and technology fields, and health-care.

Investor takeaway: Its shares are down 16 % this year and have a three-year, average annual loss of 10%. Analysts give its shares six "buy" ratings, three "buy/holds," and nine "holds," according to a survey of analysts by S&P. For fiscal 2012, analysts estimate it will earn $3.52 per share and that earnings will decline 3% next year to $3.43 per share.

S&P has it rated "hold," saying that "recent regulatory matters and negative publicity about for-profit educators have started to hurt (its) new student enrollments (and those at nearly all of its peers), and we see this continuing for a while."

1. Apollo Group (APOL)

Company profile: Apollo, with a market value of $4 billion, is one of the world's largest for-profit education companies, with 350,000 students enrolled in its University of Phoenix. The company offers classes online and at its learning centers in nearly 40 states and internationally.

Investor takeaway: Its shares are down 35% this year and have a three-year, average annual decline of 19%. Analysts give its shares three "buy" ratings, six "buy/holds," nine "holds," and one "weak hold," according to a survey of analysts by S&P.

S&P has a "sell" rating on its shares as it says it finds them "overvalued" given the regulatory pressures the company and the industry faces. S&P expects revenues to decline 13% this fiscal year (ending in August) and another 8% in fiscal 2013, following a 4% drop in fiscal 2011.

For fiscal 2012, analysts estimate it will earn $3.36 per share and that that will decline by 4% to $3.21 next year. The Yacktman fund owned 2.1% of its shares at the end of the first quarter, the largest of any mutual fund.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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