4-day school week – which stock wins?
A budget shortfall for public schools bodes well for private education companies.
State and local governments, facing record budgetary shortfalls, are looking at tweaking the educational delivery system in search for savings. One option being explored is a four-day school week.
A shortened school week is controversial. Sure, teacher layoffs may be avoided due to dollars gained from such a shift, but surely there will be a negative impact on a child’s educational development as a result?
If so, one group possibly cheering the news is the private education business -- including online educators.
Think about it for a moment. Would you want your child’s exposure to learning cut from five days to four days? Parents will do whatever is necessary to fill their children with educational opportunity.
If there is a cut at the public level, that cut will likely be filled somewhere else. As a parent, I know I would look at alternatives for that lost day that could include some sort of online education program completed from home.
I may need to work harder and pay a bit more, but if a community is unwilling to fund education with tax dollars, then so be it.
For the online education business the timing is perfect. The entire group has benefited greatly from a recessionary environment that has consumers looking to education as a way to find employment or greater income.
Stocks in the space have appreciated nicely during the last year, but with unemployment expected to recede investors may be concerned about the future. Those fears may subside to the extent a new opportunity arises.
Not all online educators offer services to the primary and secondary schooling market, but a new revenue opportunity due to shorter public schools might change that landscape.
For now I would focus on the opportunity for K12. The stock has enjoyed a nice run, having essentially doubled in value over the last year on expectations of a current year profit of 59 cents per share.
That number is expected to grow to 79 cents in the 2011 fiscal year. Already enjoying strong growth a shorter school week is likely to accelerate growth for the company.
It might be worth paying a bit of a premium for that growth especially if the four-day school week goes national. I like these 10 growth stocks too.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.