Sell Block: Honor Roll or Detention for Internet-School Stocks?
A basket of 10 education stocks is up 22% over the past 12 months, while the S&P 500 is down 37% and the Dow’s lost 34%. Full-year earnings estimates for eight of the 10 have been revised upward in the past 90 days. The average price-to-earnings multiple is 28.9. After the dot-com bust and during the recession that followed, the average P/E was 30.4. Apollo’s multiple may have been as high as 41, and it’s only trading at 24 now, but there’s a lot more competition these days than there was back then. So Cramer thinks there might be little upside left in these stocks.
There are some keepers, though. American Public Education is performing well thanks to its military-focused programs. Eighty percent of its student body is either military or military related. The stock’s up just about 7% since Cramer’s Jan. 9 call, and he thinks APEI is still a buy. The rest of this cohort – COCO, CECO, ESI – are up 20%, though, and those should be sold.
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