We recently published a list of the 12 Best Education Stocks to Buy in 2025. In this article, we are going to take a look at where Stride, Inc. (NYSE:LRN) stands against the other best education stocks to buy in 2025.
Is The Time for the Department of Education Over?
The future of the Department of Education in the US is a significant subject of debate in the education sector, as the Trump administration has already started to close parts of it, with plans to shut it down completely. The Department of Education is a significant body in the country, responsible for distributing college aid, underwriting student loans, and ensuring unhindered access to education for all.
CNBC reported that President Trump campaigned to find and eradicate the “radicals who have infiltrated the federal Department of Education,” nominating Linda McMahon to help improve the department. In a White House press conference on February 4, President Trump said:
“I want Linda to put herself out of a job.”
The US Department of Education was established by former President Jimmy Carter in 1979. Since the Department of Education is an agency authorized by Congress, congressional approval is necessary to shut it down. However, President Trump, Elon Musk, and the DOGE team are continually chipping at it, as reported by CNBC. Experts are of the opinion that although some of the programs administered and managed by the department can be distributed to other agencies, this transition may result in significant disruptions to the country’s $1.6 trillion student loan program.
President Trump’s efforts against the department are facing criticism from experts and US citizens alike. CNBC reported the results of a poll conducted by Data for Progress on behalf of the Student Borrower Protection Center and Groundwork Collaborative, showing that 61% of likely voters were of the opinion that they would oppose the Trump administration’s use of an executive order to abolish the Education Department. Only 34% of respondents approved of this move. The survey of 1,294 people was conducted between January 31 to February 2.
Significant Cuts in the Department of Education Already Underway
Elon Musk’s DOGE team significantly scaled down the Institute of Education Sciences, which is the research wing of the Education Department. In a statement, the American Educational Research Association and the Council of Professional Associations on Federal Statistics said 169 contracts were canceled. Some of the canceled contracts were related to the collection and reporting of education statistics. CNBC reported that Sameer Gadkaree, president and CEO of The Institute for College Access & Success, said the following about the scenario:
“Sensible public policy for education depends on strong research and basic collection and availability of data on institutional performance and student outcomes. Without it, Americans will be in the dark on shifts in debt, student success, and how public dollars should be invested to increase effectiveness.”
CNBC also reported that Tomas Philipson, a professor of public policy studies at the University of Chicago and former acting chair of the White House Council of Economic Advisers, was of the following opinion:
“One of the intents [of the administration’s actions] is to redistribute funding from the federal education department to states and localities. If such a redistribution occurs, this will likely improve, as opposed to hurt, learning as state and locals are better suited to address their heterogeneous needs. The one-size-fits-all nature of federal regulations and spending programs can often be improved upon.”
Shifting the Department of Education’s $1.6 trillion student loan program is not anticipated to be an easy process that may go smoothly by experts. It may have ripples across a current college student body of millions, along with more than 42 million borrowers with federal student loan debt.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 education stocks. We then selected the top 12 most popular stocks among elite hedge funds as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A teacher giving a lecture in a classroom illuminated by a bright light of knowledge.
Stride, Inc. (NYSE:LRN)
Number of Hedge Fund Holders: 33
Stride, Inc. (NYSE:LRN) provides an educational platform to deliver online learning to students across the US. It offers various services, including professional skills training, K-12 education, career learning, and talent development.
The company reported a revenue of $587.2 million in fiscal Q2 2025 compared to $504.9 million in the prior year period. Income from operations reached $125.1 million, while net income touched $96.4 million, compared with $66.8 million in the prior year period. Stride, Inc. (NYSE:LRN) also grew its free cash flow, reaching $208.6 million. This growth was attributed to continued growth in the company’s enrollments and margin improvements. As of December 31, 2024, Stride, Inc. (NYSE:LRN) has cash and cash equivalents and marketable securities of around $738.1 million, compared with $714.2 million reported on June 30, 2024.
It is raising revenue and adjusted operating forecast for the full fiscal year 2025, with management expecting revenue in the range of $2.320 billion to $2.355 billion.
Overall, LRN ranks 2nd on our list of the best education stocks to buy in 2025. While we acknowledge the potential of LRN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LRN 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.