Investing Theory

Smart Picks: Top 5 Education Stocks to Watch in 2024 for Savvy Investors

October 12, 2023

Looking for education stocks with compelling growth prospects in 2024? This tightly-curated list showcases the Top 5 Education Stocks to Watch in 2024, chosen for their potential in an industry ripe for innovation and expansion.

Here, you’ll quickly learn why these stocks stand out in a crowd of options, and how they align with key trends reshaping education.

The Future of Education

Navigating through the 21st century, we find the education landscape transforming at a rapid pace. The influence of the Covid-19 pandemic has accelerated this change, leading to reduced learning outcomes and heightened educational inequality. Yet, at the same time, it has spurred the growth of online learning and private educational services, painting a complex picture for best education stocks.

No longer confined to the four walls of a classroom, education is undergoing a digital revolution. Instead, it’s becoming increasingly digital, with a projected 9.1% compound annual growth rate by 2026 for online education. Alongside this, the private educational services market is expanding rapidly, with the U.S. education market alone expected to grow from approximately USD 1.41 trillion in 2021 to around USD 3.12 trillion by 2030. These trends open up a wealth of opportunities for investors interested in the education industry.

The Rise of Online Learning

Online learning, one of the most significant trends, is reshaping the education sector dramatically. This growth can be attributed to factors such as convenience and flexibility, which enable students to access course materials and lectures at their comfort, as well as a more cost-effective structure compared to traditional education.

So it's no wonder that new technologies have hit the world and education and... the Wall Street in terms on new investing possibilities as well. Increasing demand for higher education, the trend toward lifelong learning and, last but not least, the remote education enforced by Covid has not only influenced a change in the entire education business, but also... building a portfolio of individual investors.

Leading education companies such as:

  • Udemy
  • MasterClass
  • Khan Academy
  • Coursera

are capitalizing on this trend, providing platforms that cater to the rising demand for online education. As the global online education market is forecasted to expand by 8.61% from 2024 to 2028, reaching a market size of US$257.70 billion in 2028, this trend undeniably has staying power.

Private Educational Services: A Growing Market

Another trend worth watching is the rapidly expanding market for private educational services. Factors driving the growth of private educational services include:

  • Quality school experience
  • Faculty and staff
  • Parent satisfaction
  • Reputation
  • Educational environment
  • Teacher-student ratio

With the global K-12 Private Education market forecasted to have a Compound Annual Growth Rate (CAGR) of 6.6% from 2023 to 2030, there’s a clear opportunity for investors to reap the rewards of this growing sector. This growth will likely impact the market capitalization of best educational stocks, making it an exciting time to invest in the education sector.

Top 5 Education Stocks to Keep an Eye On

Keeping these trends in mind, here are the top 5 best education stocks to watch in 2024. These picks span across various segments of the education industry, offering diverse opportunities for savvy investors looking to buy educational stocks.

Stock #1: Global Tech Education (NYSE: ATGE)

Topping our list is Adtalem Global Education, also known as Global Tech Education, a leading technology group. This company is a key player in the global EdTech and Smart Classrooms Market, which exceeded $125.3 billion in 2022 and is projected to grow to $232.9 billion by 2027.

Education stocks to buy: Adtalem Global Education: revenue growth and consensus recommendation; screen from the tool.

With a commitment to empowering students to achieve their goals, Adtalem offers a range of career-oriented education options across various fields.

The company's institutions span diverse sectors such as healthcare, business, technology, and more, catering to the evolving needs of today's workforce. Adtalem's educational programs often emphasize practical skills and real-world application, preparing students for success in their chosen professions.

Through a network of institutions like Chamberlain University, DeVry University, Ross University School of Medicine, and others, Adtalem aims to make quality education accessible and relevant, contributing to the development of skilled professionals worldwide. The company's focus on innovation, industry relevance, and global impact positions it as a key player in the dynamic landscape of higher education.

Such factors place Global Tech Education among the top education stocks to monitor.

Stock #2: Udemy Inc (NASDAQ: UDMY)

Udemy Inc. is an online learning platform that offers a diverse range of courses across various subjects, allowing users to acquire new skills and knowledge at their own pace. Founded in 2010, Udemy provides a marketplace for instructors to create and share their courses with a global audience.

With a vast library covering topics from technology and business to personal development and beyond, Udemy has become a popular choice for individuals seeking flexible and accessible learning opportunities. The platform leverages video lectures, quizzes, and interactive content to enhance the online learning experience, catering to a broad audience of learners worldwide.

Exemplary education stocks: Udemy Inc (NASDAQ: UDMY) revenue estimates and consensus recommendation; view from the tool.

It is worth noting that Udemy Inc. is often compared to its biggest market rival, Coursera. Both companies are often mentioned on the lists of best education stocks to buy; however, we found several reasons why it's worth to bet on this particular education stock rather than on its biggest competitor:

  1. Diverse Course Selection: Udemy has a broader selection of courses, often created by industry professionals and experts. This diversity allows learners to find courses on specific topics of interest, including niche subjects that might not be as readily available on other platforms.
  2. One-Time Purchase Model: Udemy typically operates on a one-time purchase model, where learners pay for a course and have lifetime access to the content. In contrast, Coursera often follows a subscription-based model, requiring ongoing payments for access to multiple courses.
  3. Self-Paced Learning: Udemy courses are designed for self-paced learning, giving learners the flexibility to progress through the material at their own speed. Coursera, while also offering self-paced courses, may have more structured timelines for some programs.
  4. Immediate Access to Content: When you purchase a Udemy course, you usually gain immediate access to the entire course content. Coursera, in some cases, may release course content gradually, especially for programs that follow a schedule.
  5. Lower Cost for Individual Courses: Udemy courses are often priced individually, and sales or promotions can lead to significant discounts. This can make individual courses on Udemy more cost-effective for learners who prefer a specific course rather than a subscription to multiple courses.

Because of these advantages listed above, Udemy is more readily chosen by knowledge-hungry users. So, if you are wondering whether it is worth to buy education stocks - in this case the answer is obvious, and supported not only by the success of the platform, but also by the real satisfaction of its students.

Stock #3: Stride Inc (NYSE: LRN)

Coming in third is Stride INC, known also as K12. It's one of the education companies which operate in the online learning space, providing innovative solutions to meet the evolving needs of students and educators. Stride offers a diverse range of educational programs and services, catering to students from kindergarten to high school. The company provides a mix of online courses, curriculum solutions, and support services to create a comprehensive learning experience.

Another education stock: Stride Inc.: revenue estimates, growth and consensus recommendation; screen from the tool.

The company focuses on providing flexible learning models, including full-time online schooling, hybrid learning, and supplemental courses. This flexibility appeals to a broad spectrum of students, including those seeking alternative education options, homeschooling, or personalized learning paths.

Stock #4: Duolingo Inc (NASDAQ: DUOL)

Duolingo is a language-learning platform that offers a range of courses in numerous languages. The company's app, has gained popularity for its user-friendly interface, gamified learning approach, and accessibility. Duolingo went public with an initial public offering (IPO) in July 2021.

What definitely sets Duolingo apart from the competition is... a strong focus on learning through play. Key Features of Duolingo include Gamified Learning - a company employs a gamified approach to language learning, turning lessons into interactive and enjoyable experiences. Users earn rewards for completing lessons, maintaining streaks, and progressing through language proficiency levels.

Education stocks to buy: Duolingo Inc: Revenue growth and eps estimates; screen from the tool.

What's more, Duolingo offer a broad variety of languages. Company has a really wide selection of languages, including popular ones like Spanish, French, German, and Mandarin, as well as less common languages. This diversity caters to a wide range of learners with different language preferences.

Another one of Duolingo's strengths is its accessibility. The platform is free to use, with optional premium features for subscribers. This accessibility has contributed to its popularity among learners worldwide. So the company definitely has a lot of potential for growth - and thus is a real bargain for individual investors.

Stock #5: Zoom Video Communications (NASDAQ: ZM)

Completing our top 5 is Zoom Video Communications. You might be surprised why the tech company actually made it onto the list of best educational stocks to buy. However, given the fact of the Covid-enforced boom in remote education you have to admit that Zoom has ceased to be just one of hundreds of similar tools for conducting calls at work, and has become a commonplace for millions of students around the world.

What's more, despite facing increased competition, Zoom has maintained a positive market perception. Its brand is often associated with ease of use, reliability, and a seamless virtual communication experience.

Education stocks to buy: Zoom Video Communications: profit margin, cfo and free cash flow; screen from the tool.

Zoom's financial performance reflected the increased demand for its services. The company reported robust revenue growth, and its financials demonstrated the ability to capitalize on the changing dynamics of work and communication. Company has shown a commitment to innovation, regularly introducing new features and updates to enhance user experience. The company has also expanded its offerings to include services beyond traditional video conferencing, such as Zoom Phone and Zoom Rooms.

With such promising performance and a competitive edge in the education industry, Zoom Video Communications is certainly an education stock to keep an eye on.

Risks and Rewards: What to Consider Before Investing in Online Education

Though the education sector brims with opportunities for high returns, investors must not forget that each investment carries its own set of risks. Factors such as:

  • the evolving landscape of higher education
  • market forces
  • political uncertainty
  • investor sentiments
  • economic conditions
  • inflation or deflation
  • potential bankruptcies of major institutions

can influence the educations stocks landscape at any time. Those mentioned above various factors can all contribute to the volatility of both the education industry and the stock market itself.

However, savvy investors know that understanding these risks and managing them effectively is a key part of the investment process. Before venturing into educational stocks, investors must weigh elements like the general risk involved, personal risk tolerance, expected return, stock liquidity, market volatility, current cost of education and the rate of inflation.

The Volatility of the Education Sector

Inherent volatility characterizes the education sector. Factors such as:

  • government regulation
  • technological advancement
  • fluctuations in student enrollment rates

can all contribute to this volatility.

Nonetheless, grasping and managing this volatility forms a crucial part of a successful investment strategy. For instance, by keeping a close eye on government policies, technological trends, and economic indicators, investors can better anticipate and respond to potential shifts in the market.

Do you need an example? Just take a look at this one. In July 2021, the Chinese central government introduced fresh regulations for out-of-school training institutions catering to students in compulsory education (up to age 15). The regulations prohibit for-profit entities from delivering courses in various subjects and impose additional restrictions on course content, delivery methods, and class schedules. Some of these restrictions also apply to companies providing courses for high school students.

Exactly this case affected the New Oriental Education and Technology Group. It's one of a few publicly traded companies which has played a significant role in the country's private education sector. However, due to the above-described law, the company counted huge losses on the stock market and is only very slowly trying to rebuild the losses.

Potential for High Returns

Risks aside, the education sector teems with potential for high returns. In fact, the sector has historically yielded an average annual return of approximately 9 percent for each additional year of schooling. Future forecasts also indicate robust performance, particularly for investments in tertiary education leading to higher earnings.

However, the potential for high returns on choosing proper education stock isn’t just about the numbers. It’s also about the impact that these investments can have on education and society as a whole. For instance, quality teachers can significantly improve the education system, and even a small investment in parent empowerment can lead to a significant increase in proficiency.

Summary: Best Education Stocks to Choose

There are many stocks worth buying. While the education sector is volatile and comes with its share of risks, it also offers significant potential for high returns. With the rise of online learning and private educational services, there are numerous opportunities for savvy investors to capitalize on.

The top education stocks – Zoom, Udemy, Stride, Duolingo or Adtalem Global Education – offer a diverse range of investment opportunities in this dynamic sector. So, are you ready to explore the potential of the education sector?

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