Three education stocks worth studying

Professional investor Guillaume Uettwiller picks three of his favourite education stocks.

A professional investor tells us where he'd put his money. This week: Guillaume Uettwiller of the CPR Global Thematic Equities team picks his three favourite education stocks.

Education is a rapidly growing $5trn industry undergoing constant change. Population growth and the expansion of the middle class in emerging markets are producing a large contingent of new students, especially in countries such as China and India. Considerable investments will have to be made all over the world to meet burgeoning demand, with countries increasingly turning to private-sector provision of formal education to help compensate for the dearth of public funding. In addition, automation and digitalisation in the labour market are forcing a massive shift in the skills needed in the workplace, so lifelong training and career development are promising new areas. For long-term investors, the industry could provide diversification and attractive returns.

Education is a sector ripe for digital disruption

In this context, we like Chegg (NYSE: CHGG), a "one-stop shop" learning-platform provider of student services ranging from online tutoring and textbook rentals to scholarships. The company successfully shifted to a fully digital business model in 2017. It can now boost growth as it increases its penetration of the US market (today it has roughly 9% of the total available market) and bundles its services together in package deals.

Online tutoring in China

Over the past five years, China's TAL Education (NYSE: TAL) has been expanding its learning-centre network rapidly, capitalising on its strong brand recognition to gain market share. Offline growth has so far been the key to overall expansion, but online education should become the major driver in the coming years. TAL Education's online services already have 2.4 million students, with enrolments increasing by 223% year-on-year last quarter. The online divisions could account for a fifth of sales by 2020.

Student housing has strong foundations

Unite Group (LSE: UTG)

Recommended

University spin-outs: where to find companies involved in cutting-edge science
Share tips

University spin-outs: where to find companies involved in cutting-edge science

Universities are innovation incubators and often launch businesses involved in fast-growing fields ranging from biotechnology to artificial intelligen…
24 Sep 2021
Investing in football clubs: how you can profit from the beautiful game
Share tips

Investing in football clubs: how you can profit from the beautiful game

Football clubs may often be money pits for oligarchs, but they are also huge global brands, says John Chambers – and investors are now starting to rec…
24 Sep 2021
Share tips of the week – 24 September
Share tips

Share tips of the week – 24 September

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
24 Sep 2021
Carbon emissions trading: how to profit from the price of pollution
Funds

Carbon emissions trading: how to profit from the price of pollution

Carbon-emission allowances are still an esoteric market, but one that looks set to grow. This new fund could help you cash in.
21 Sep 2021

Most Popular

Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021