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

Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Share tips of the week – 21 January
Share tips

Share tips of the week – 21 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
21 Jan 2022
Seven cheap defence stocks to buy now
Share tips

Seven cheap defence stocks to buy now

We’ve got used to a world without war between major powers, but that era is coming to an end as Russia threatens Ukraine and China eyes Taiwan. Buy de…
21 Jan 2022
HubSpot: a tech stock set to tumble
Trading

HubSpot: a tech stock set to tumble

US tech stocks have had a fantastic couple of years. But this year is unlikely to be so bullish for high-fliers that can’t turn big profits.
18 Jan 2022

Most Popular

Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022
Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Interest rates might rise faster than expected – what does that mean for your money?
Global Economy

Interest rates might rise faster than expected – what does that mean for your money?

The idea that the US Federal Reserve could raise interest rates much earlier than anticipated has upset the markets. John Stepek explains why, and wha…
6 Jan 2022