This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

For-Profit Education Stocks: Are They Investment Grade?

Its peer Apollo has received much scrutiny for the quality of its academic offerings. The company has had past dealings with the Securities and Exchange Commission, which had launched investigations against Apollo regarding how the company recognized portions of its revenue.

Although these concerns (among others) have gone away, shares of Apollo are trading at less-than-half of what they were at the beginning of 2012. Worse, the stock is one-quarter of what it was in January 2009. I believe that there is a compelling argument here that the stock, which trades at a price-to-earnings ratio of less than 7 -- one-third of the industry average, is undervalued. The same case can be made for DeVry.

Likewise, Strayer and Corinthian Colleges (COCO), which have both been under pressure this year, are not too far behind. What's keeping investors at arm's length is not necessarily their collective poor performances but it's the bad publicity that this sector has received.

With regards to growing student loans and what has been compared to "predatory lending" during the housing bubble, I won't argue that there are several names within the group (if not all) that have had some serious struggles with "ethics." But as with the bank resolutions to the post-housing crash, the government has stepped in with tighter regulation.

We can debate the extent of the government's involvement and whether the Gainful Employment rule has gone overboard. However, I don't believe that this process, which is critical to protecting the federal investment in our students, diminishes the importance of for-profit education and the role that they can still play in the education future of the U.S. This service will always be in demand.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
COCO $0.01 1.49%
APOL $6.95 -1.97%
DV $17.03 -10.65%
STRA $45.24 -3.70%
AAPL $94.02 -2.67%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs