The Market's Only High-Growth Stocks?

If you liked the speculation Friday segment we did last week on American Public Education and the for-profit education sector, one of the few groups that’s still growing at a torrid pace, here’s some more information that we didn’t have room to cram into the piece.

This applies not just to APEI , but to everything from Apollo Group to DeVry, Strayer Education and Grand Canyon Education, which came public in November, the first IPO since August, and is up 79% since.

Between 2000 and 2003, during the last serious economic slowdown, post-secondary school stocks returned 392%, while the S&P 500 experienced a 24% decline. So these are unquestionably recession-friendly stocks.

Jim mentioned a study by Harris Dellas and Plutarchos Sakellaris that showed for every 1% increase in U.S. unemployment, enrollments in post-secondary institutions increased by 2%, something that should have owners of these stocks cheering Friday’s poor jobs number. The for-profit education stocks work right now because people flee to college or graduate school when they can’t find work.

But there’s another reason we think that these companies will flourish during what’s looking like the worst economic slowdown since the Great Depression: price. Getting a degree from American Public Education is substantially cheaper than going to a state school, let alone a private college or university. APEI hasn’t raised its undergraduate rates, which are 60% lower than undergraduate tuition at the average state school, since 2000.

Think of American Public Education, Apollo Group, Strayer – all of these for-profit school stocks – as trade-down plays. They are the educational equivalents of Cramer fave Family Dollar or Ralcorp, the largest maker of private-label (aka knock-off) cereal in America.

People have less money courtesy of the recession, but they want their bachelor's degrees and graduate degrees more than ever. These inexpensive for-profit schools are the solution.

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Cliff Mason is the Senior Writer of CNBC's Mad Money w/Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Richand Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like.

Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.

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