In this article, we presented the list of the 10 best education stocks to buy now. You can click to skip ahead and jump to the 5 best education stocks to buy now.
They say that a good leader is educated and equipped with enough knowledge to help people become better citizens, shape a good economy, and reside by knowing and respecting the rights, laws, and regulations of a country.
When the portion of educated workers in a country increases, the economy of that country becomes more productive as educated workers may perform a task that requires literacy and critical thinking more effectively. That's why the taxpayer funds spent on education are really investments in future productivity and competitiveness of a country. It isn't a coincidence that the United States is at the cutting edge of technological progress. Even though we suck when it comes to average math or reading scores, we produce a large number of highly educated students who go on to get trained in the best universities in the world and launch world-class companies.
According to UNESCO and the United Nations Human Development Programme, the ratio of the number of children of official secondary school age enrolled in school to the number of children of official secondary school age in the population is higher in developed nations than it is in developing ones.
Newly elect, Joe Biden has a strong link to education. His wife is an English professor in Northern Virginia. Recently, the president elect pledged to open most of the nation’s schools during his first 100 days as president.
“It should be a national priority to get our kids back into school and keep them in school, if Congress provides the funding, we need to protect students, educators and staff. If states and cities put strong public health measures in place that we all follow, then my team will work to see that the majority of our schools can be open by the end of my first 100 days.”
Based on a poll conducted by Gallup, 82% felt that education is an extremely important factor to consider when voting. According to BAV Group and Wharton School of the University of Pennsylvania’s ranking and analysis, the US was ranked number one in education based on economic influence to education. The report stated that:
“The United States of America is a North American nation that is the world’s most dominant economic and military power. Likewise, its cultural imprint spans the world, led in large part by its popular culture expressed in music, movies and television.”
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Recent activities related to the COVID-19 pandemic including the lockdown greatly affected the lives of students and teachers. Some educational establishments were forced to shut down leaving many educators questioning what happens next?
According to UNICEF, 61.6 percent of the world’s student population was affected by school closures. As of September 30, 2020, approximately 1.077 billion learnings around the world are currently affected due to closures and 224 million children are out of school.
As the pandemic continues to affect most of the world, global efforts to utilize technology are developing quickly. According to Globe News Wire, in 2019, the mobile learning market was $27.32 billion. By 2020, mobile e-learning will rise to $37.6 billion and maintain a CAGR of 36.3% down to 2025.
In order to identify the 10 best education stocks to buy now, we started with the 57 holdings in Global X's Education ETF (EDUT) as of December 11, 2020, and we were able to narrow down our list to 10 education stocks by using the hedge fund sentiment scores.
Our in-house study shows that by using the hedge fund sentiment data, we can classify a select group of stocks that can outperform the S&P 500 index by double digits annually. For example, our monthly newsletter's portfolio of stock picks has beaten the market by more than 78 percentage points since March 2017 (see details here). Some of the portfolio picks of our monthly newsletter were also publicly shared by us. In October, we shared this real estate stock and since then it is up more than 50 percent.
Based on our hedge fund sentiment data, we present to you the 12 best education stocks to buy now. These are the most popular fitness stocks among the 800+ hedge funds tracked by Insider Monkey:
10. K12 Inc (NYSE:LRN)
No of HFs: 23
Total Value of HF Holdings: $152 Million
We start the list of 10 best education stocks to buy now with K12, Inc. The company is a for-profit education company founded by Ronald J. Packard. They market online schooling and curricula, providing an alternative to traditional education. During the full fiscal year 2020, the company reported a revenue of $1,040.8 million.
Recently, the company was a victim of ransomware attacks but they were able to make a payment to the attacker with cyber insurance to ensure that any information will not be released. In a company statement they mentioned,
“We do believe that the attacker accessed certain parts of our corporate back office systems, including some student and employee information on those systems, but it will take further time to determine the scope of the information accessed.”
On a lighter note, K12 paid $165 million in cash to buy a Denver-based coding Bootcamp Galvanize. Acquiring Galvanize will provide hybrid high school and career training programs to their students.
9. Pluralsight, Inc. (NASDAQ:PS)
No of HFs: 24
Total Value of HF Holdings: $183 Million
Pluralsight, Inc is an American online education company founded in 2004. The company offers a variety of video training courses for software developers, IT administrators, and creative professionals. During the third quarter of 2020, the company reported a revenue of $99.5 million.
The top hedge fund holder of this stock is Ricky Sandler’s Eminence Capital which had $68 million invested in the stock at the end of September.
8. 2U, Inc. (NASDAQ:TWOU)
No of HFs: 25
Total Value of HF Holdings: $214 Million
TWOU ranks 8th in our list of the 10 best education stocks to buy now. 2U, Inc. was founded in 2008, they are an educational technology company that offers online degree programs through a could-based software platform. During the third quarter of 2020, the company reported a revenue of $201.1 million, a 31$ increase from the same period last year.
In an article, we mentioned the top 10 robotics and artificial intelligence stocks to buy; TWOU was ranked number nine.
7. Bright Horizons Family Solutions, Inc. (NYSE:BFAM)
No of HFs: 26
Total Value of HF Holdings: $314 Million
BFAM ranks 7th in our list of the 10 best education stocks to buy now. Bright Horizons is a child-care provider headquartered in Watertown, Massachusetts. The company also provides back-up child care, tuition program management, education advising, and student loan repayment programs. During the third quarter of 2020, the company reported a revenue of $338 million.
Is BFAM a compelling investment case? In an article, we mentioned Upslope Capital’s thoughts on BFAM,
“Bright Horizons is a leading operator of daycare centers and related services, primarily in the United States and, to a lesser extent, the U.K. and Netherlands. Offerings include full-service daycare (~85% of revenues in a normal year), back-up care (on-site or home-based for both children and the elderly; ~10% of revenues), and education advisory (~5% of revenue).
What makes Bright Horizons unique is its employer-sponsored offering (e.g. on-site daycare center operated for the benefit of a company’s employees. The employer covers capex and facility maintenance). This focus results in a stickier customer base (95%+ retention7 ), lower capital needs, and the opportunity to compete more on quality of service than price. Within this attractive niche, BFAM is 6x as large as its next biggest competitor."
6. Bandwidth, Inc. (NASDAQ:BAND)
No of HFs: 30
Total Value of HF Holdings: $344 Million
Bandwidth, Inc. was formed in 1999. They are a cloud-based communications platform-as-a-service company that markets software application programming interfaces for voice messaging. During the third quarter of 2020, the company reported a revenue of $84.8 million, up 40% year-over-year.
BAND recently won a 2021 Alexander Hamilton Award for transforming its treasury organization with an API integration launched earlier this year with ICD and Trovata.
The top hedge fund holder of this stock is Richard Driehaus’ Driehaus Capital which had $58 million invested in the stock at the end of September.
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Disclosure: None. 10 Best Education Stocks To Buy Now is originally published at Insider Monkey.