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4 Education Stocks to Gain on Shift to Online Instruction

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On May 12, California’s state university system, the largest in the United States, canceled all classes on campus for the fall semester and moved instruction online as the country continues to grapple with the coronavirus outbreak. Also, the Los Angeles County said that it is likely to extend the stay-at-home orders by another three months.

The coronavirus pandemic has kept millions of people indoors with most now switching to work and learn from home. The U.S. education system has been one of the biggest casualties of the pandemic with schools closed almost indefinitely. This has made schools go for online education to help students complete their semester this year.

California Switches to Online Education and Instruction

The chancellor of California State University said that classes at its 23 campuses would be canceled for the semester that begins in September, with instruction moving online. The decision of online instruction came after the nation’s top infectious disease expert, Dr. Anthony Fauci, told Congress that lifting the sweeping lockdowns could touch off new outbreaks of the coronavirus.

Moreover, experts believe that infections could peak in autumn when most schools start their semesters. Schools including K-12 are closed in the United States for more than two months now. Though the closure of schools will prevent the infection from spreading, the fact that schools are likely to remain shut for an indefinite period is raising worries about the education of millions of children. 

Online Education to Gain Traction        

Schools across the world have started imparting classes online given that there are no immediate signs of coronavirus subsiding. In fact, experts and the World Health Organization predict that a second wave of coronavirus might hit countries that are rushing to reopen businesses and the economy.

A report from UNESCO says more than 1 billion students have been prevented from attending schools, colleges and universities. Nationwide school closures are affecting over 70% of the world’s population, the report says. This is where online education can be a game changer. Although most students are staying at home during this time, they can keep on learning with various video lectures, online seminars, animations, reading materials and even opt for online tests.

Education technology was a growing market before the coronavirus pandemic hit, attracting more than $18.5 billion in investment in 2019. However, with ongoing disruption for students, the sector looks set to grow and innovate even further.

Our Choices

With no timeline for a possible coronavirus vaccine, it is likely that stay-at-home orders will be imposed for months. Schools are also likely to shift to online education. Given this scenario, it is prudent to keep a close watch on these four online education providers that are poised to grow.

Chegg Inc (CHGG - Free Report) offers Chegg Services, comprising digital products and services such as Chegg Study, Chegg Writing and Chegg Tutors. These allow students to find human help on its learning platform through a network of live tutors.

The company’s expected earnings growth rate for the current year is 33%. The Zacks Consensus Estimate for current-year earnings has improved 12% over the past 60 days.  Chegg sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Career Education Corporation (PRDO - Free Report) provides offers bachelor’s, associate and non-degree programs in information technologies, visual communication and design technologies. 

The company’s expected earnings growth rate for the current year is 10.2%. The Zacks Consensus Estimate for current-year earnings has improved 4.1% over the past 60 days.  Career Educationcarries a Zacks Rank #1.

Bright Scholar Education Holdings Ltd is an operator of international and bilingual K-12 schools, and provides training and other educational services.

The company’s expected earnings growth rate for the current year is 27.8%. Its shares have gained 1.9% in the past 30 days.  Bright Scholar Educationcarries a Zacks Rank #2 (Buy).

Lincoln EducationalServices Corporation (LINC - Free Report) is a leading and diversified for-profit provider of a career-oriented post-secondary education headquartered in West Orange, NJ.

The company’s expected earnings growth rate for the current year is more than 100%. Its shares have gained 16.7% in the past 30 days. Lincoln Educational carries a Zacks Rank #2.

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