Wall Street Gets Schooled by These Two Stocks

The school system here in the United States is a mess.

It is going to take billions – if not trillions – of dollars to repair, and that tsunami of cash can help those who jump on the education technology and repair bandwagon get rich.

To give you an idea of the type of potential gains involved back in August of 2016, I recommended Chegg (NYSE: CHGG) and K12, Inc (NYSE: LRN) as stock to profit from the educational technology trends.

Since then, Chegg has been a monster stock returning 576% for those who were paying attention.

K12 has been the poor stepchild advancing only 134%.

A $10,000 investment in each would be worth over $91,000 today.

This is life-changing profits form an investment that makes the world a better place, and our children futures a whole lot brighter.

That’s my kind of win-win.

Identify the Problems, Invest in the Solutions

I’m pretty passionate about education, so I spend a fair amount of time studying the newly developed sector of market opportunities.

I’m hard pressed to think of one problem we face today that could not be fixed via better education.

I’m such a geek about all this that the world would be a much better place if we started making a philosophy class mandatory starting in middle school, so kids actually learn to think, but that’s a topic for another time and place.

We all read the same headlines.

Our kids’ tests scores are falling across the spectrum compared to the rest of the world.

The schools in some areas are almost literally falling apart.

Teachers are underpaid, and the quit rate among new teachers is staggering.

The nations we compete against on the global stage are surpassing us, and our children and grandchildren will pay a heavy price if it continues.

I can go on for hours on this subject, and my wife will tell you that after a bourbon or three I often do.

This is not the time or place to get into how I think we got here but instead, I am going to focus on those companies that are doing something to fix the mess.

An extraordinary amount of money will be made by those who invest in the solution and hang on for the long ride to come.

Navigating these types of investments can be tricky. The ability to find exactly when to buy and sell a stock or an option would be an invaluable investing tool to maximize your potential profits.

My friend Garrett Baldwin has recently made a system which does just that, and now it’s publicly available.

Using his Quantum Loop technology, he tracks where 15,000 stocks are in their life cycle and uses that information to make massive gains.

Garrett used that information to make a 3,935% return in 64 trading days, and now you can that type of potential trading power in your corner.

Two Educational Companies to Follow and Profit

Pearson PLC (NYSE: PSO) is the world’s largest educational company right now.

They sell educational programs, testing material, assessment, and enterprise software, and also produce online consumer and professional learning materials.

They have sold off their financial publishing and educational businesses in the past few years as well as a large stake in the Penguin/Random House publishing unit, although they do retain 25% of that business.

In addition, they have a division that does professional assessments and language courses for the adult and business markets.

The company is pushing to grow in the online and virtual learning segments of the market place.

Their digital programs can also help kids develop stronger reading and study skills.

Digital is the future of education, and Pearson is doing a fantastic job of transforming its course catalog form print to digital in order to boost sales around the world.

This is still very much a company in transition, but they are doing all the right thing.

The company is based in London, so there has been some Brexit related weakness as well.

Once the ship is righted, I have no problem seeing the stock double or better over the next several years.

I am doing my part as I checked my Amazon orders for which publishers work I have been buying, and Penguin/Random House has collected a bunch of cash from me over the past year.

Instructure (NYSE: INST) is an educational technology company that I’m very familiar with because my youngest’s school uses their Canvas product that helps students manage their studies and assignments.

They also have a product called Bridge that allows managers and employees to work together to develop a solid career path and increase profitability.

I found Canvas to be really easy to use, and it made a huge difference in managing her workflow and track assignments, due dates, and all the rest of her curriculum.

If Bridge is as good for business use, then we have a double whammy education technology company that can go a lot higher.

CEO Daniel Goldsmith certainly thinks so. He increased his holding by close to 50% earlier this month when the company missed the always accurate Wall Street analyst estimates, and the stock got crushed.

Many of these educational technology companies trade outside my usual comfort zone as they are newer, fast-growing tech companies that trade at much higher multiples that I will typically pay.

I am a big believer that a combination of technology and activism can remake our education system and make me an enormous amount of money, so I think it makes sense to have a small portion of our capital devoted to an almost venture capital like exposure to these stocks.

I would suggest buying small positions in a few sect companies now and being prepared to add big to the best-positioned companies if and when we finally see a decent decline in the stock market.

This will not be the last time you hear from me on the opportunities in education, I assure you.

To the Max,

Tim Melvin

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