5 Education Stocks To Watch In 2024
Education has come a long way since chalkboards and even dry-erase boards, for better or worse. There's a reason, after all, why members of Generation Z are known as zoomers. Remote learning has changed today's educational game. Screen time is significant, as educational apps that cater to casual dabblers and hardcore studiers, as well as a decade-plus-long integration of iPad and tablet-assisted learning, have created fundamental change to the K-12, college, and continued-learning landscape.
But along with new edtech and much-needed updates come ever-increasing pressures on the results of standardized testing, high-stakes test anxiety at the university level, teacher shortages, and divisive stances on what should or should not be taught in schools. Factor in the unproven but omnipresent introduction of artificial intelligence to that rapidly changing landscape, and a digital tumbleweed blows past: This is the educational Wild West, and everyone wants to win it. While public education is underfunded and under attack, private enterprise in the education sector is flourishing — or is it? Take a bite from this apple of knowledge, and study up on five education stocks to watch in 2024.
1. Chegg
Chegg (NYSE: CHGG) is a California-based edtech company that got its start in textbook rentals in 2005. It's since expanded to become a paid subscription-based homework help service, and what the company calls "the leading student-first connected learning platform." Chegg began publicly trading in 2013, with 15,000,000 at $12.50 per share. Chegg's stock price tripled during the pandemic, as widespread remote learning replaced in-school instruction.
This growth didn't come without outcry. "This $12 Billion Company Is Getting Rich Off Students Cheating Their Way Through Covid," read a March 2021 Forbes piece. While questions of academic integrity didn't keep Chegg down, schools reopening did. In November 2021, Chegg stock crashed after a Q4 earnings call reported a dismal outlook for revenue growth (or even subscriber retention) as schools shifted back to in-person learning, and subscriptions dropped.
Chegg sang much the same tune when free AI tools like OpenAI's ChatGPT hit the market in May 2023 and April 2024. While AI's accuracy is hotly debatable, so is Chegg's future. The education stock is one to watch if only as a case study in how powerful a reckoning generative AI may wreak in edtech, and how companies can adapt and compete. Chegg now touts a fully integrated AI update, which has received mixed reviews from users. Will increased investment in AI be enough to save Chegg, or will this company fail the final? We'll have to watch the market and see. (Check out the best-performing stocks of 2023.)
2. Zoom
They say you don't have to get ready if you stay ready, and teleconferencing app provider Zoom Video Communications (NASDAQ: ZM) has been ready since its launch in 2011. The peer-to-peer videoconferencing giant was founded by Eric Yuan, and it raised $356.8 million from selling 9.9 million shares, some trading for as high as $66 a share, when the company went public in 2019.
D.A. Davidson analyst Rishi Jaluria told CNBC in 2019, "... our due diligence suggests Zoom is gaining mindshare and could become the de facto standard for videoconferencing." Forbes reported that Zoom was one of the top five most downloaded apps of 2020, and no wonder. The pandemic lockdown had everyone suddenly videoconferencing from home to connect with friends, family, coworkers, and the educational system. But is Zoom's stock still benefiting in 2024, now that the world has largely returned to living in person?
In 2024, Zoom's stock is stable, while some analysts argue that its peak growth period is long over. Zoom is focusing on AI to stay relevant, and appeal to teams and groups, with Zoom Workplace, an AI-powered companion that helps teams summarize meetings and "help users reimagine teamwork, facilitate connections, and improve productivity," per Zoom's website. While it isn't yet clear how AI-powered collaboration works, corporate teams and college groups alike may find it attractive — and therefore lucrative to investors. (Review our best tips for investing in stocks as a beginner.)
3. Coursera
If you're sensing a theme with these education stocks, you're right on the money: Many edtech or edtech-adjacent companies rode the tailwinds of the COVID-19 pandemic into the headwinds of AI. Coursera (NYSE: COUR) is one such case. Coursera is an online learning platform that provides access to free (or paid) courses students can explore for fun, or for degrees and certificates.
A month after Coursera's IPO in March 2021, it earned a valuation of over $7 billion. Yes, billion. This number mystified analysts and edtech spectators, but the consensus is that Coursera's offerings are attractive to individual consumers seeking credentials as well as corporate workers seeking job training certificates, all the same.
"I think people really believe that these new alternative education models are the future of how people will be trained up for the labor market," Trace Urdan, managing director at Tyton Partners, told Inside Higher Ed in 2021. In 2024, Tipranks considers Coursera a moderate buy, even though its 2024 April earnings report didn't feature the most promising guidance. Coursera itself isn't trying to beat AI at its own game, but educate people about it. Along with leaning into the use of AI in its courses and companions, Coursera is focusing on classes about AI technology.
4. Adtalem Global Education
Adtalem Global Education (NYSE: ATGE), a Chicago-based online health care university system, focuses on training and workforce solutions. Its partner institutions include Chamberlain University, Ross University School of Medicine and Ross University School of Veterinary Medicine, Walden University, and the American University of the Caribbean School of Medicine. Adtalem has long, controversial roots in for-profit education: The company began as DeVry Institute, and is infamous for being required to return tuition funds after making false promises about positive job placement for students who completed its program.
As Adtalem, however, the company enjoys a rosier reputation, at least when it comes to the stock market. As of May 2024, shares of Adtalem trade for $65.54, and is a strong buy with a Zacks Rank of #1. How has AI not disrupted this particular for-profit educational service provider? This remains a mystery, but Adtalem is already adopting AI into its offerings. The company has partnered with Google to create "Julian" — an AI tutor that works with students using personalized curriculum to reinforce concepts. Adtalem is one education stock to watch, even if only because generative AI hasn't yet struck it down in any significant fashion.
5. Perdoceo Education Corporation
Much in the vein of Adtalem, there is Perdoceo Education Corporation (NASDAQ: PRDO), a for-profit virtual university owner with a checkered past of inflated job-placement claims. While many of the colleges Perdoceo once owned have closed, it currently owns four: American Intercontinental University, California Southern University, Colorado Technical University, and Trident University International. Founded in 1994, the Schaumburg-based company went public in 1996. By sheer virtue of surviving until 2024, the public company is worth watching.
Perdoceo is one of the largest operators of private universities as of this writing, with a market value of $1.53 billion on 65.6 million outstanding shares. Earnings grew by 55.3% from the previous year, and is overall considered undervalued. While other for-profit universities and edtech companies see a drop-off in student retention due to AI, Perdoceo has seen growth. Will that growth continue? The outlook is uncertain, but based on the surprising but steady nature of Perdoceo recently, seemingly brighter than that of other edtech companies. (On that note, read up on some of the best and worst stock predictions in U.S. history.)