"Apollo has campuses and learning centers in 39 states, Canada, Mexico, and the Netherlands. Its programs range from associate to doctorate degrees, in business, education, health care, technology, and social sciences.

"In recent years the company has been significantly expanding its lower cost associate-degree programs, which also appeal to laid-off workers looking to improve their employment opportunities.

"The strategy is also helping fuel growth in its more profitable bachelor degree programs, as when associate degree students graduate a percentage of them move on to studying for bachelor degrees.

"Apollo is also expanding into secondary school education, with 11 Insight Schools so far, located in ten states. Focusing on working-adult education allows Apollo to forgo high costs for dorms, food services, and sports.

"Yet government-backed student loans are based on the higher cost traditional universities, making upfront costs for students lower at Apollo than they would be at traditional schools.

"With lower costs Apollo is also able to spend more on improving student success rates, and placements upon graduation, important in attracting new students.

"Apollo more than doubled its enrollments and revenues just between 2001 and 2005. And growth of its top and bottom lines continues in spite of the severe recession, with the company benefiting from employee concerns about their jobs, and perceived need for more education.

"The company is in excellent financial condition, with no long-term debt, and strong cash flow, which allowed it to repurchase 7.2 million shares of its stock in its May quarter.

"The stock is selling at 13.6 times estimated 2010 earnings.Of the 22 analysts currently following the stock, 7 rate Apollo as a 'Strong Buy', 10 rate it a 'Buy', 4 as a 'Hold', and only one as a 'Sell'. Their consensus target for the stock is $93.

"The main risks are that a continuing recession could result in lowered availability of tuition-assistance from working students' employers, and perhaps from government student loans as Congress worries about high student-loan debts.

"In addition, there is the ever present risk of a general market correction in this overbought market. Our upside target over the next 12 months is 89."

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