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On Dec 31, Zacks Investment Research upgraded Apollo Education Group, Inc. (APOL - Analyst Report), a leading private education provider in U.S, to a Zacks Rank #1 (Strong Buy) following the company’s acquisition of Open Colleges Australia Pty Ltd.

Why the Upgrade?

Apollo’s stock gained significant momentum after it announced its agreement to acquire 70% of the outstanding stock of Open Colleges Australia Pty Ltd (also known as Open Colleges) on Dec 17.   

Apollo Global, the wholly-owned subsidiary of Apollo Education Group, will purchase in cash for about $98.5 million. The purchase consideration also includes a contingent payment of about $47 million based on 2014 operating results. Moreover, the agreement allows Apollo Global to purchase the remaining 30% stock in future. The acquisition is expected to be completed by the second quarter of 2014.

APOL has adopted several strategies in order to drive business growth. The acquisition of Open College is in line with Apollo’s long-term strategy of global expansion. Open Colleges is one of Australia's oldest and largest providers of distance learning.  As such, the acquisition will allow Apollo Global to access the growing education market in Australia and focus its resources in the high-potential international education market.

Another education company growing through acquisition includes American Public Education, Inc. (APEI - Analyst Report). Back in Nov 2013, American Public acquired Ohio-based National Education Seminars, Inc., also known as Hondros College (Nursing Programs).  The acquisition is in line with APEI’s long-term strategic plan of focusing on quality education, improving student retention and enhancing the quality of health, science and technology programs.

Other than growth through acquisition, Apollo Group is consistently enhancing and expanding its services/programs and investing in academic quality to improve student experience and outcomes. In mid Nov 2013, the company introduced an additional Masters of Business Administration program in Finance. The new program is an addition to the existing list of Master of Business Administration, Master of Management and Master of Science in Accountancy programs. The new program is expected to cater to the growing demand for financial advisors.

Apollo’s other initiatives include investments in adaptive learning and curriculum development, and introduction of a new learning and service platform. The company is also working toward developing new learning systems and is continuously enhancing and expanding student support service offerings. Such initiatives help improve retention rates. In addition to this, the company is offering more discounts and scholarships to improve affordability and student value proposition.

Other Stocks to Consider

Other stocks worth considering in the education sector include New Oriental Education & Technology Group Inc. (EDU - Snapshot Report) and Xueda Education Group . Both these stocks carry a Zacks Rank #2 (Buy).

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