We recently compiled a list of the 7 Best Education Stocks To Invest In Now. In this article, we are going to take a look at where Coursera Inc. (NYSE:COUR) stands against the other education stocks.
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).
A person sitting at a desk, engaged in an online course in the field of business and finance.
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.”
Overall COUR ranks 5th on our list of the best education stocks to invest in. While we acknowledge the potential of COUR as an investment, 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 COUR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
