Through The Fly's Eyes: Apollo Group

from Theflyonthewall.com





Education Stocks Might Have Hit Bottom

After peaking at $98 per share on June of 2004, Apollo Group' s stock has headed straight downhill and now trades at $41.

After a great bull run that began in 1995, the industry began to mature and these stocks rolled over.

We blogged earlier today about how Pequot Capital's chief, Art Samberg, likes cotton. He also is looking for a turnaround in publicly traded education stocks. The stocks he likes are Apollo Group (APOL), Career Education (CECO) and Corinthian Colleges (COCO).

Apollo has been putting a lot of spending behind its on-line community college program called Axia College which it hopes can accelerate Apollo's growth rate. Management is hopeful Axia will be a feeding tube for its four-year on-line college, University of Phoenix.

Samberg also believes Career Education, which has been a real bloodbath, could be ripe for a turnaround under new management.

Publicly traded education stocks, as an industry, have stayed away from using leveraged balance sheets. Samberg notes that if current valuation persists and if fundamentals start improving, private equity firms could find these companies very attractive.