In this article, we’re going to talk about the 7 best education stocks to invest in now.
Is the Education Sector Poised for Growth?
The education sector is undergoing a transformative phase, driven by technological advancements and shifting learning paradigms. The rise of online learning platforms and educational technology has reshaped how students and professionals access knowledge, creating a dynamic environment ripe for investment. With the global education market projected to grow significantly, now is an opportune time for investors to explore leading education stocks that are well-positioned to capitalize on these trends.
The education industry is not just about traditional institutions anymore, it encompasses a range of companies that provide innovative solutions, from online courses to tutoring services. By 2030, the market is expected to reach a staggering $10 trillion, representing over 6% of global GDP, as reported by HolonIQ by QS. This growth is fueled by a projected increase of 350 million post-secondary graduates and nearly 800 million more K-12 graduates worldwide. Asia and Africa are leading this expansion. To accommodate this student surge, the world will need to add an average of 1.5 million teachers per year, reaching 100 million teachers by 2030. Of these, 50% will be teaching pre-K and primary education. Post-secondary teaching will undergo a particularly significant transformation. The role of the teacher will evolve from a traditional role to a more mentorship-oriented approach. The K-12 education market is projected to exceed $5 trillion by 2030, reflecting the growing importance of early education and the need for a skilled workforce.
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According to market.us, the global EdTech market is projected to experience substantial growth, expanding from $220.5 billion in 2023 to $810.3 billion by 2033, with a compound annual growth rate of 13.9%. North America currently dominates the market, accounting for over 37.3% of the total revenue in 2023, reaching $82.24 billion.
AI, being the hot topic for almost all industries today, has seen increasing adoption across various sectors, significantly impacting the Edtech industry. The EdTech software industry is highly competitive, with 65,000+ companies vying for market share. Over 67% of recent EdTech unicorns incorporate AI in their products and services. A good example of such a company includes Squirrel AI, a leading Chinese AI startup, that offers personalized education solutions. Leveraging a vast student database and advanced AI algorithms developed in collaboration with YiXue Education, Squirrel AI provides adaptive assessments and tailored learning paths. The company has raised $190.4 million in funding since it was founded in 2014. It has received significant recognition, including the GITEX Best Education Technology Award in 2019 and the $1 million Artificial Intelligence for the Benefit of Humanity prize in 2021.
As educational institutions recognize the importance of integrating AI into their curricula, programs like Udacity’s AI Nanodegree are becoming essential for equipping future leaders with the necessary skills. The growing reliance on AI technologies underscores a shift towards more innovative and efficient educational practices, promising substantial returns as these trends continue to unfold. This trend, together with the robust performance of EdTech, underscores the overall growth trajectory of the education sector, fueled by rising demand for innovative educational solutions and a shift towards online learning platforms. This article will delve into the 7 best education stocks to invest in now that demonstrate robust financial performance and align with current market trends.
Methodology
We sifted through ETFs, online rankings, and internet lists to compile a list of 15 education stocks with high market caps. We then selected the 7 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7 Best Education Stocks To Invest In Now
7. Adtalem Global Education Inc. (NYSE:ATGE)
Market Cap as of October 22: $2.72 billion
Number of Hedge Fund Holders: 23
Adtalem Global Education Inc. (NYSE:ATGE) operates several for-profit higher education institutions and is a leading provider of post-secondary education, specializing in healthcare and professional fields. It operates through its subsidiaries, including Chamberlain University, Walden University, and Ross University, offering a variety of degree programs and certifications. It focuses on providing students with the knowledge and skills needed to succeed in their chosen careers while addressing workforce demands in healthcare and other industries.
In the fourth quarter of fiscal 2024, the company demonstrated strong financial performance, with revenue increasing 12.41% year-over-year to generate $409.91 million. Total revenues for FY2024 improved by 9.2% to $1.58 billion. Enrollment also rebounded, with total enrollment returning to pre-pandemic levels and increasing 10% year-over-year in FQ4.
To further strengthen its position, the company undertook several strategic initiatives. Chamberlain University expanded its presence by opening a new campus in Phoenix and announcing plans to enter the Kansas City market. Additionally, Chamberlain partnered with the American Association of Critical Care Nurses to offer a new specialty-focused program. Walden University also made significant strides, redesigning its website for a more streamlined experience and continuing to address nursing labor shortages through its MSN program. The university also focused on tackling the middle health crisis through its counseling, psychology, social work, and human services programs.
The company anticipates another successful year in fiscal year 2025, projecting revenue between $1.66 billion and $1.7 billion and adjusted earnings per share ranging from $5.60 to $5.85. This positive outlook is attributed to the dedication and hard work of its nearly 10,000 colleagues, who are committed to serving students and making a positive impact on society.
Ariel Fund stated the following regarding Adtalem Global Education Inc. (NYSE:ATGE) in its Q2 2024 investor letter:
“Some holdings in the portfolio advanced considerably this quarter. Shares of global leader in for-profit education, Adtalem Global Education Inc. (NYSE:ATGE), jumped following a robust quarterly earnings beat, accelerating new student enrollment growth and a subsequent raise in full year guidance. Revenue per student also came in better than expected on tuition increases and higher credit hours. Meanwhile, we remain encouraged by management’s solid execution of remediation initiatives at the medical and veterinary schools, where revenue growth outperformed and total enrollment trends are improving. As the number one grantor of nursing degrees in the U.S. and the largest producer of African American MDs, PhDs and nurses in the country, we remain confident ATGE will benefit from the healthcare worker shortage in the U.S.”
6. Laureate Education Inc. (NASDAQ:LAUR)
Market Cap as of October 22: $2.38 billion
Number of Hedge Fund Holders: 23
Laureate Education Inc. (NASDAQ:LAUR) owns and operates Laureate International Universities, with campuses in Mexico and Peru. It’s a large, global for-profit university network that offers a range of undergraduate and graduate programs across various disciplines, including business, healthcare, technology, and law. The mission is to provide accessible, high-quality education to students around the world.
Unlike other institutions relying on government-sponsored student loan programs, this company generates revenue primarily from private pay streams, funded by family savings, cash flow, and student salaries. Its portfolio includes medical, dental, and veterinary schools, further enhancing its reputation. It has established a strong brand presence and holds the highest accreditations.
Revenue for Q2 2024 at Laureate Education Inc. (NASDAQ:LAUR) rose by 8.03% on a year-over-year basis, recording an amount of $499.20 million. While there were some minor timing impacts by segment, overall performance for H1 2024 was positive, with revenue growth of 5%. Mexico experienced strong growth, with new and total enrollment volumes increasing by 6% and 5%, respectively. Revenue in Mexico grew 10% for the second quarter. Peru saw more modest growth, with revenue increasing by 5%.
It repurchased over $72 million worth of shares, maintaining an average annual retention rate of 80%, and generating an average revenue per student of $3,400. While the recent weakening of the Mexican peso has led to a slight downward adjustment in the company’s outlook, the market dynamics remain favorable for private higher education in both countries.
Laureate Education Inc.’s (NASDAQ:LAUR) universities have achieved significant rankings, and the company’s students are representing their countries at the Olympic and Paralympic games.
5. Coursera Inc. (NYSE:COUR)
Market Cap as of October 22: $1.20 billion
Number of Hedge Fund Holders: 27
Coursera Inc. (NYSE:COUR) is a global platform for online learning and career development that offers anyone, anywhere, access to online courses and degrees from leading universities and companies. Its mission is to provide accessible, affordable, and flexible education to learners of all ages and backgrounds. Its courses are designed to be self-paced and can be taken on demand, making them convenient for busy professionals and students. It has partnered with numerous institutions, including Stanford University, Yale University, and Google, to offer high-quality content.
In the second quarter of 2024, the company expanded its Professional Certificate portfolio by adding 15 new entry-level certificates developed in partnership with top technology brands. These certificates cover high-demand careers and are designed to equip learners with the skills needed to succeed in the evolving job market. It upgraded 8 existing certificates with job-specific GenAI content, demonstrating the commitment to keeping credentials relevant. The platform has grown substantially, with ~7 million new registered learners and a 20% increase in Paid Enterprise Customers.
Q2 2024 revenue improved 10.82% from a year-ago period, amounting to $170.34 million. Additionally, it repurchased 2.7 million shares for approximately $31 million. At the end of Q2, the company had approximately $709 million in unrestricted cash and cash equivalents. The company also returned $95 million to shareholders through stock repurchases while maintaining a focus on growth.
The company’s platform is well-positioned to capitalize on the growing demand for skills development and the transformation of higher education. As the GenAI revolution unfolds, individuals and businesses are adapting and staying competitive. Coursera Inc.’s (NYSE:COUR) focus on quality content, industry partnerships, and a global reach positions it as a leader in its industry.
Here is what ClearBridge SMID Cap Growth Strategy has to say about Coursera, Inc. in its Q3 2021 investor letter:
“We also added two positions in the IPO aftermarket, (one is) online education portal Coursera. Coursera, which makes academic courses from some of the world’s leading universities available through its platform and offers online degree programs, saw its shares trade lower following its March IPO but has seen significant uptake for its services since the onset of COVID.”
4. Stride Inc. (NYSE:LRN)
Market Cap as of October 22: $2.77 billion
Number of Hedge Fund Holders: 27
Stride Inc. (NYSE:LRN) is a for-profit education company that provides online and blended education programs. It offers a variety of educational programs, including K-12 public school programs, online private schools, and adult learning programs. The mission is to provide high-quality, personalized education to students of all ages and backgrounds. It has a strong focus on technology and innovation, and it uses advanced tools and platforms to deliver engaging and effective learning experiences.
It is committed to making education a customer-focused endeavor. The focus on innovation and technology ensures that it delivers cutting-edge educational solutions. It has experienced remarkable growth in enrollments, with a record-breaking 18.5% year-over-year increase in FQ1 2025. This surge in demand demonstrates its ability to meet the needs of families seeking educational opportunities.
The company made a revenue of $551.08 million in the first quarter of fiscal 2025, up 14.77% year-over-year. Diluted earnings per share reached $0.94, up from $0.83 last year. The company’s core offerings continue to be in high demand, as evidenced by the increase in total enrollments to over 222,000. Career Learning revenue grew by 30%, and enrollments increased by 30.4%. General Education revenue grew 10%, with enrollment growth of 11.3%.
While the loss of ESSER funding is a headwind to revenue per enrollment, Stride Inc. (NYSE:LRN) expects to offset this impact through a positive funding environment. Adult Learning revenue continues to be affected by the slowdown in software development products.
It has demonstrated strong financial performance and a positive outlook for the full year. The company’s revenue, profitability, and operating margins have all shown significant improvement, driven by growth and operational efficiency. With a solid financial position and a favorable market outlook, Stride Inc. (NYSE:LRN) is well-positioned for continued success.
3. Grand Canyon Education Inc. (NASDAQ:LOPE)
Market Cap as of October 22: $3.90 billion
Number of Hedge Fund Holders: 29
Grand Canyon Education Inc. (NASDAQ:LOPE) is a for-profit corporation that provides services to universities, specializing in program development, online education, and operational support. It’s a comprehensive education services provider offering a range of services, including technology, academic, counseling, marketing and communication, and back-office services. It also partners with 25 universities.
Management anticipates new and total traditional campus enrollments to remain relatively flat year-over-year, aligning with the low end of the original expectations. The Department of Education’s FAFSA processing problems have led to significant delays and errors, forcing universities to push back deadlines. This has resulted in a decline in FAFSA completions among high school seniors, including at GCU.
In Q2 2024, it made $227.46 million in revenue, up 8.02% year-over-year, with online enrollment growth of 7.5% and hybrid growth of 12.1%. Despite declining enrollments at many universities nationwide, Grand Canyon Education Inc. (NASDAQ:LOPE) and its partners continue to experience growth. This success can be attributed to its understanding of the untapped potential in the American labor force and its ability to offer creative delivery models and relevant programs that cater to the diverse needs of students.
With the resolution of FAFSA issues, inflation reduction, and other competitive advantages like low cost, low debt levels, relevant academic programs, and significant campus investment, it aims to reaccelerate its growth towards 50,000 students. The new enrollment goal for the ground campus is a 15% increase over this fiscal year.
The company continues to demonstrate innovative partnerships and program development. The goal of 80 partner locations, including 40 GCU locations, remains on track. Recent initiatives, such as the electricians’ pre-apprenticeship program and the manufacturing certificate program, showcase its ability to address industry needs and provide valuable educational opportunities.
Diamond Hill Long-Short Fund made the following comment about Grand Canyon Education, Inc. (NASDAQ:LOPE) in its Q4 2022 investor letter:
“Other bottom contributors included our long positions in Alphabet and Meta and our short position in Grand Canyon Education, Inc. (NASDAQ:LOPE). Post-secondary education services company Grand Canyon Education (LOPE) is benefiting from a positive inflection in online enrollment at Grand Canyon University (GCU), LOPE’s main client. This positive inflection may reflect some countercyclical demand for education as people anticipate a slowing economy and therefore return to school to finish or obtain a degree. Shares responded positively to this inflection, which is expected to similarly increase net online enrollment in 2023’s first half. Longer term, we have doubts about LOPE’s growth prospects in a crowded field and as many for-profit universities (including LOPE) face challenges — and heightened regulatory scrutiny — shifting to a non-profit business model.”
2. TAL Education Group (NYSE:TAL)
Market Cap as of October 22: $5.23 billion
Number of Hedge Fund Holders: 33
TAL Education Group (NYSE:TAL) is a Chinese holding company that offers after-school education and tutoring for students in primary and secondary school. It offers a wide range of courses, including K-12 education, English language training, and test preparation. TAL has experienced rapid growth in recent years, as more parents in China seek to give their children a competitive edge in education.
In FQ1 2025, the company’s revenues went up by 50.37% to $414.19 million compared to a year-ago period. The overall revenue improvement was pushed by the growth in both Learning Services and Content Solutions.
The company focuses on improving its learning devices and how it sells them to reach more students with high-quality educational materials. It has combined learning content, AI technology, and quality hardware and software to create better learning experiences. Its proprietary MathGPT large language model is getting better, and the AI features in the learning devices provide students with helpful and reliable learning tools.
TAL Education Group (NYSE:TAL) is poised for growth. The company’s strategic investments in learning services, offline centers, and AI technology are expected to drive cost reductions and revenue growth. Expansion plans in the overseas market and innovative online learning offerings further strengthen its position. Experts are optimistic about its enrichment learning program and its potential to drive significant revenue growth across product categories.
1. New Oriental Education & Technology Group Inc. (NYSE:EDU)
Market Cap as of October 22: $10.93 billion
Number of Hedge Fund Holders: 37
New Oriental Education & Technology Group Inc. (NYSE:EDU) provides private educational services in China and offers a range of tutoring services, including K-12 education, English language training, and test preparation. It has taken steps to diversify its business, including expanding into online education and investing in technology.
The company demonstrated strong revenue growth in FQ4 2024, up 32.08% as compared to the year-ago period. The total revenue generated in the closing quarter was $1.14 billion. The company has projected a 31% to 34% year-over-year increase in revenue for its core education services business in FQ1 2025. The company also increased its share repurchase program from $400 million to $700 million, effective through May 31, 2025.
Full-year revenue increased by 43.9% year-over-year. This growth was primarily due to a significant increase in the number of schools and learning centers, which rose by 114 and 277, respectively. The total number of schools and learning centers reached 1025.
The company is focusing on new business areas like non-academic tutoring, intelligent learning systems and devices, study tours and research camps, educational materials and digitalized smart study solutions, and exam preparation courses for junior college diploma students, along with exploring opportunities in the culture and tourism market. The expansion into these new educational business initiatives contributed significantly to the 43% increase in revenue in 2024.
New Oriental Education & Technology Group Inc. (NYSE:EDU) leverages both a robust network of physical learning centers and schools alongside its innovative Koolearn.com platform, providing a diverse range of educational opportunities. This multi-channel approach ensures accessibility and caters to the evolving needs of students, positioning it for continued growth.
Ariel Global Fund made the following comment about New Oriental Education & Technology Group Inc. (NYSE:EDU) in its Q2 2023 investor letter:
“We added a new investment position inNew Oriental Education & Technology Group Inc. (NYSE:EDU), a leading after school tutoring program in China. Although the Chinese government banned K-12 academic after school tutoring, the company was able to leverage its expertise in course content quality control and standardized tutoring processes to quickly reposition itself as a leader of non-academic after school tutoring. Furthermore, we anticipate the company’s strong brand and the entrepreneurial acumen of its founder, Michael Yu, will create additional opportunities for expansion as a comprehensive educational service provider.”
While we acknowledge the growth potential of New Oriental Education & Technology Group Inc. (NYSE:EDU), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than EDU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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