"China places high value on education, making New Oriental Education & Technology Group (NYSE: EDU) somewhat defensive in a growth-stunted economy," says Chris Rowe. (Incidentally, we reviewed two U.S. education stocks in a post yesterday.)
Meanwhile, in The Tycoon Report, Rowe explains, "We believe a slowing global economy will have minimal impact on the education sector in China." Here's his review of this firm, which operates English language schools.
"New Oriental Education is a rapidly growing company that provides private educational services to over 1.3 million students via 207 school centers, primarily in the People's Republic of China. They help privately prepare Chinese for admission tests to foreign universities emphasizing English.
"It offers its program, service, and products in six areas: language training; test preparation; primary and secondary school; educational content, software, and other technology development and distribution; online education; and other services and products.
"I consider the stock to be somewhat defensive in a growth-stunted economy. And while you may be able to make large short-term profits on this stocks, the goal in this recommendation is to be very long-term holders.
"Each year, Chinese universities produce over 400,000 engineering graduates (compared to Japan's 200,000/year and Untied States' 60,000).
"Chinese students continue to work their way to ivy-league schools around the globe while the largest companies in the world continue to move research facilities and manufacturing plants to take advantage of low costs.
"Also, as China builds trade and diplomatic relations around the globe, the desire to learn foreign languages increases. Whether economic growth is fast, slow or non-existent, education will continue to be a commodity in demand.
"The company has a quarter of a billion dollars, which is over $7.00/ share, in cash with no debt. The average 5-year earnings growth rate is 69% and the return on equity is 19% with profit margins of 25%.
"In addition, 47% of the stock is owned by management. They've been gaining brand recognition as they have been targeting millions of enrollees.
"This is one stock I feel comfortable buying for my kids and forgetting about. Perhaps their education fund will be funded by China's education growth."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
11-27-2008 @ 4:45AM
lisap said...
To give importance in Education is a good political plan. In this way, more benefits and improvement in the system will be implemented for the sake of the young ones and children in their basic studies. The new US administration is about to take over, and education is a topic that’s hovering on the minds of many. What will president-elect Barack Obama do to improve the massive groups of students and teachers in America? In an article at The Apple, Obama’s first step into the development of education is focused on No Child Left Behind. He does not intend to scrap the program, but he does want to reform it, particularly when it comes to standardized testing. He is against preparing students all year to “fill out bubbles.” As long as the performance is up to standard, both Obama and Vice-President Elect Biden will support charter schools. Teachers at charter schools and beyond find Obama's incentives like Teacher Service Scholarships and various pay rewards hopeful. Moreover, a major part of the president-elect’s proposal is to enhance Early Head Start Programs and provide tax credits for college education. Restoring faith in the American educational system via these ideas and more will surely lead to the kind of credit repair the country needs – where the currency is a vibrant workforce that is equipped and ready to lead America into the future. Click to learn more about Credit Repair.