Amid novel coronavirus outbreak, for-profit education stocks are expected to gain manifold as online educators are viewing shutdowns as an opportunity to increase its reach among students. In fact, many offline players are also striving to reach students who aspire to complete their courses as planned, with the help of various online education platforms.
On Mar 11, the World Health Organization declared the novel coronavirus a "global pandemic" during a press conference in Geneva. The virus is spreading so vigorously that it has infected more than 340k people in 192 countries and territories, and caused nearly 15k deaths as of Mar 23.
The pandemic has prompted administrators across the globe to implement shutdown in many states to mitigate further spread of this life-threatening disease. The United States, New York, California, Illinois, Connecticut, New Jersey and Ohio announced lockdowns to contain the spread of the virus.
U.S. Education System to Thrive Amid COVID-19 Stress
As the world struggles to contain the deadly COVID-19 pandemic, an unprecedented wave of school facility closures is pushing millions of students and tens of thousands of unprepared teachers into online classrooms. Online education had earlier proven to be a temporary support to schools closed due to natural disasters like Hurricane Katrina in 2005 and Hurricane Sandy in 2012.
Now, 124 countries have imposed nationwide school and university shutdowns, which are affecting more than 1.25 billion students, per UNESCO’s latest report. Nonetheless, the organization is providing immediate support to countries with a list of digital education tools, including digital learning management systems, apps designed for smart feature phones and software with a strong offline component.
Meanwhile, schools and universities in the United States have undertaken steps to shut down their premises to maintain social distancing. Currently, Strategic Education, Inc. (STRA - Free Report) , Universal Technical Institute, Inc. (UTI - Free Report) and Perdoceo Education Corporation (PRDO - Free Report) are cashing in on the unprecedented surge in demand for online education these days.
This apart, classroom type education providing companies, and some e-learning companies like Chegg, Inc. (CHGG - Free Report) , New Oriental Education & Technology Group Inc. (EDU - Free Report) , Instructure, Inc. , Arco Platform Limited (ARCE - Free Report) and K12 Inc. (LRN) are benefiting from the surge in online education demand. Among these school stocks, Strategic Education, Universal Technical, Instructure and Arco carry a Zacks Rank #2 (Buy), while Perdoceo, Chegg, New Oriental Education and K12 have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Markedly, the Zacks Schools industry has outperformed the S&P 500 composite in the year-to-date period.
Notably, Strategic Education, Universal Technical Institute and Lincoln Educational Services Corporation have announced temporarily transition from classroom instruction to remote/distance learning. On Mar 19, Strategic Education announced that it will offer free online courses to universities, school districts, employers and the general public via its subsidiary, Sophia Learning online education platform.
Kaplan, Inc. — which is part of Graham Holdings Company — unveiled free online educational courses for select industry-recognized credentials to colleges and universities in the United States in conjugation with CyberVista.
Encouragingly, the U.S. Immigration and Customs Enforcement's Student and Exchange Visitor Program issued a new guideline on Mar 9 to remove restriction on the number of online courses for international students, thereby providing a significant opportunity for the schools stocks.
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