5 For-Profit Education Stocks With Upside

NEW YORK (TheStreet) -- The National Center for Education Statistics reports that American schools and colleges will likely welcome record number of students this fall as enrollment could be higher-than expected.

The fall 2011 snapshot survey findings show that enrollment for public elementary and secondary schools will be more than 49.4 million students. An additional 6 million students are expected to attend private schools. A record 19.7 million students are likely to attend American colleges and universities this fall, a positive enrollment growth of 4.4 million since fall 2000.

There are approximately 20.4 million students currently pursuing higher education in the U.S. and the British Council expects enrollment to increase by nearly 2 million by 2014.

Public elementary and secondary schools will spend about $525 billion for the 2011-12 academic year, with current expenditure per student averaging to $10,591. During the 2011-12 school year, colleges and universities are expected to award 833,000 associate's degrees, 1.7 million bachelor's degrees, 696,000 master's degrees, 102,300 first-professional degrees, and 74,700 doctoral degrees, as per data provided by the National Centre for Education Statistics.

Based on average estimates of analysts surveyed by Bloomberg, these five stocks have upsides ranging from 9% to 38%. Analysts' buy recommendation for these stocks is 64%, while hold rating is 34%.

The stocks are listed in ascending order of upside potential.

5. Apollo Group ( APOL) is a provider of online and on-campus educational programs and services at the undergraduate, master's and doctoral levels through its subsidiaries University of Phoenix, Apollo Global, and Institute for Professional Development and College for Financial Planning. The company offers its programs and services in 40 states worldwide as well as online.

Of the 19 analysts covering the stock, 63% recommend a buy and 37% suggest a hold. Analysts' average 12-month price target is $54.09, about 9.4% higher than the current price, according to a Bloomberg consensus.

For the fourth quarter of fiscal 2011, the company reported net revenue of $1.12 billion. Net income attributable to Apollo Group was $188.6 million, or $1.37 per share, compared to $47.5 million, or 32 cents per share, for the same quarter prior year.

For the fiscal year ended Aug. 2011 the company reported total revenue of $4.7 billion. Full-year net profit attributable to Apollo group was $569.9 million, or $4.02 per share, compared to $568.4 million, or $3.72 per share, a year ago. Cash and cash equivalents totaled $1517.7 million, vs. $1284.8 million in the prior year.

The company estimates net revenue for fiscal 2012 in the range of $4.1 billion to $4.3 billion and operating income is seen between $655 million and $780 million.

4. Grand Canyon Education ( LOPE) is a provider of postsecondary education services, focused on offering graduate and undergraduate degree programs in core disciplines of education, business, healthcare, and liberal arts. In addition to online programs, the company offers courses at its 115-acre campus in Phoenix, Arizona, and onsite at the facilities of employers.

Of the 11 analysts covering the stock, 55% recommend a buy and 45% rate a hold. Analysts average 12-month price target for the stock is $19.00, about 24.9% higher than the current price, according to a Bloomberg consensus.

For 2011 third quarter, LOPE reported net revenue of $108.9 million, up 10.1% from $98.9 million in the same quarter prior year. During the quarter, net income increased 19.8% to $12.9 million, or 29 cents per share, compared to $10.7 million, or 23 cents, for the same period in 2010.

During the quarter, enrollments were approximately 44,500, up 5.2% from 42,300 in the same quarter last year.

The company's revenue guidance for the fourth quarter is $112 million to $116 million. Target operating margin is 18.5% and adjusted EBITDA margin is 25%. Recently, LOPE announced its fourth-quarter earnings release date as Feb. 21, 2012.

3. Bridgepoint Education ( BPI) is a provider of postsecondary education services. The company's wholly owned subsidiaries, Ashford University and University of the Rockies, are regionally accredited academic institutions that offer associate, bachelor's, master's and doctoral programs in the disciplines of business, education, psychology, social sciences and health sciences. These institutions deliver programs online and on traditional campuses.

Of the 13 analysts covering the stock, 77% recommend a buy and 23% suggest a hold. The stock's average 12-month price target is $28.25, or 25.1% higher than the current price, according to a Bloomberg consensus.

For the third quarter of 2011, Bridgepoint reported revenue of $242.7 million, up 27% from $190.9 million in the same quarter last year. Net income grew 21% to $43.8 million, or 78 cents per share, from $36.1 million, or 61 cents, for the same period a year ago.

Enrollments at the institution rose to 90,597 as of Sep. 30, 2011, increasing 17.3% from 77,179 as of Sep. 2010. New student enrollments for the third quarter of 2011 were approximately 22,000, compared to 24,000 in the same quarter last year. For the nine-month period ended Sep. 2011, the institution had new student enrollments of approximately 68,600, compared with 66,750 for the same period in 2010, an increase of 2.8%.

The company expects total enrollments of 83,000 to 85,000 at the end of Dec. 2011. Revenue for the fiscal year 2011 is seen in the range of $920 million to $926 million. Net income is pegged between $168.5 million and $170.3 million, or $2.95 to $2.98 per share.

2. K12 ( LRN) offers proprietary curriculum and educational services designed for individualized learning, primarily from kindergarten through 12th grade. Besides operating in 21 states, the company expanded into two new states in fiscal year 2011, Massachusetts and Michigan. In addition, LRN also operates three online private schools.

Of the 10 analysts covering the stock, 70% recommend a buy and 20% rate a hold. Analysts' average 12-month price target for the stock is 32.5% higher than the current price of $36.71, according to a Bloomberg consensus.

For the first quarter of fiscal 2012, K12 reported total revenue of $193.3 million, up 43.3% from $134.8 million in the same period a year ago. Net income to common and Series A shareholders was $4.6 million, or 12 cents per share, increasing 109% from $2.2 million, or 7 cents, in the same period last year.

During the quarter, average enrollment was 141,525 students, rising 42% from 99,611 in the same period prior year.

Recently, K12 announced a partnership with New York Times on a first of-its-kind education conference: "Schools for Tomorrow: Bringing Technology into the Class Room." Recently, the company partnered Kaplan test papers to offer a complete portfolio of college preparation solutions under the Kaplan K12 Learning Services.

1. DeVry ( DV) provides educational services and operates as the holding company of Advanced Academics, Becker Professional Education, Carrington College and Carrington College California, Chamberlain College of Nursing, DeVry Brasil, DeVry University and Ross University, offering programs in business, healthcare and technology. In Aug. 2011, the company acquired the business operations of privately held American University of the Caribbean.

Of the 20 analysts covering the stock, 55% recommended a buy and 45% suggest a hold. Analysts' average 12-month price target for the stock is $48.31, about 37.6% higher than the current levels, according to data compiled by Bloomberg.

For the first quarter of fiscal 2012, DeVry reported total revenue of $519 million and net income of $57 million, or 83 cents of diluted earnings per share. During the quarter, total graduate course takers at DeVry University increased by 2.3% from the year-ago quarter. At DeVry Medical International, new enrollments increased 22.9% to 853, compared to 694 students on a pro forma basis in the prior-year term. At DeVry Brasil, new students increased by 29.2% during the quarter.

The company raised its quarterly cash dividend by 25% to 30 cents per share from 24 cents payable Jan. 10, 2012 to share holders of record Dec. 8, 2011. DeVry's board has authorized a seventh share repurchase program totaling $100 million through Dec. 2013.

The United States Olympic Committee has named DeVry as an official education provider for the U.S. Olympic and Paralympics athletes and training hopefuls through 2016. Carrington college has announced the opening of its new campus in Mesquite, located at 3733 West Emporium.

>>To see these stocks in action, visit the 5 For-Profit Education Stocks With Upside portfolio on Stockpickr.

More from Education

What the Fed Rate Hike Means For You

What the Fed Rate Hike Means For You

To Easily Get Out of Credit Card Fees and Charges - Just Ask the Right Question

To Easily Get Out of Credit Card Fees and Charges - Just Ask the Right Question

How to Calculate Your Net Worth and Pin Down Your Financial Health

How to Calculate Your Net Worth and Pin Down Your Financial Health

All 2018 Graduates Must Watch Jim Cramer's Bucknell Commencement Speech

All 2018 Graduates Must Watch Jim Cramer's Bucknell Commencement Speech

Jim Cramer Has 2 Tips for the Graduating Class of 2018

Jim Cramer Has 2 Tips for the Graduating Class of 2018