Top picks 2012: New Oriental Education

The leader in private schooling benefits from China's one-child policy and emphasis on credentials.

By TheStockAdvisors Jan 10, 2012 3:29PM
Image: High school students with arms raised in classroom (© Image Source/Getty Images)This post is one in a series in which over 50 newsletter advisors share their Top Picks for 2012.

By Paul Goodwin, Cabot China & Emerging Markets Report

New Oriental Education (EDU) is the leader in the private education sector in China. The company specializes in teaching languages, especially English, and test preparation courses; it  also offers a varied curriculum that includes primary and secondary education.

With more than 11,300 teachers and 1.8 million enrollments in 2010, this is a substantial business. New Oriental has more than 50 schools and 400 other learning centers, as well as nearly 30 company bookstores and over 5,000 third-party ones.

Revenue at New Oriental is driven, in part, by China’s one-child policy. This means each child may have two parents and four grandparents helping to pay tuition (and six people providing the pressure to do well). There is also a general tendency in China to value educational credentials as a route to success, which provides a strong base for the company to build on.

Revenue grew by 44% in fiscal 2011, and earnings were up 42% in the first quarter, 100% in the second quarter and 44% in the third quarter. The stock has been correcting since September, dipping back to October 2010 levels, which provides a low-risk entry point.

The company has no debt and has cash reserves of over $706 million, which augurs well for a build-out in both bricks and mortar and online activities.

Steven Halpern's TheStockAdvisors.com​​ offers a free daily review of the favorite stock ideas of the nation's top financial newsletter advisors.


Tags: EDU
0Comments

DATA PROVIDERS

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.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

126
126 rated 1
286
286 rated 2
474
474 rated 3
680
680 rated 4
626
626 rated 5
609
609 rated 6
620
620 rated 7
462
462 rated 8
304
304 rated 9
132
132 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
BIDUBAIDU Inc10
BXTHE BLACKSTONE GROUP L.P10
CELGCELGENE CORP10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
More

VIDEO ON MSN MONEY

ABOUT

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.