Technical School: Analysis of Seven Education Stocks

TheStreet.com

NEW YORK (TheStreet) -- School stocks have had a volatile ride in the new millennium, driven mostly by technical momentum, not fundamentals.

Today I am profiling seven school stocks. Three peaked in the April 2004 to June 2004 time frame, one in February 2009, and the other three in April 2010.

These stocks have not traded in sync with the overall market volatility. One bottomed in October 2011, two in July 2012, another in November 2012, and the other three in 2013 between January and April. When stocks are this volatile, trading strategies must be based more heavily on the technicals than on the fundamentals.

School stocks are in the consumer-discretionary sector which is 14.6% overvalued. The school industry is just 6% overvalued, and all of these stocks are rated hold according to ValuEngine.



A factor for these stocks is whether the Senate passes a bill that prevents the doubling of the interest rate on student loans. If rates hold steady, school stocks could have an upside trade due to improving technicals.

Reading the Table

OV / UN Valued - The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating - A "1-Engine" rating is a Strong Sell, a "2-Engine" rating is a Sell, a "3-Engine" rating is a Hold, a "4-Engine" rating is a Buy and a "5-Engine" rating is a Strong Buy.

Last 12-Month Return (%) - Stocks with a Red number declined by that percentage over the last twelve months. Stocks with a Black number increased by that percentage.

Forecast 1-Year Return - Stocks with a Red number are projected to decline by that percentage over the next twelve months. Stocks with a Black number in the Table are projected to move higher by that percentage over the next twelve months.

Value Level: is the price at which to enter a GTC Limit Order to buy on weakness. The letters mean; W-Weekly, M-Monthly, Q-Quarterly, S-Semiannual and A- Annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: is the price at which to enter a GTC Limit Order to sell on strength.

Apollo Group ($21.69) is poised for a technical rally given daily closes above the 200-day simple moving average at $21.04. This stock peaked at $98.01 in June 2004, and has struggled since then. Apollo traded as low as $15.98 on March 4, and the weekly chart profile stays positive on a close this week above the five-week modified moving average at $21.45. My semiannual value level is $9.88 with a weekly pivot at $21.41 and quarterly risky level at $24.23.



Career Education ($3.04) needs to have a daily close above its 200-day SMA at $3.16 to gather technical momentum. This stock at $3 should be considered an option on survival. Career Education peaked at $70.91 in April 2004, and traded as low as $2.03 on April 22. The weekly chart profile stays positive on a close this week above the five-week MMA at $2.81. My monthly value level is $2.26 with a weekly pivot at $3.26 and annual risky level at $3.55.

Corinthian Colleges ($2.64) is above its 200-day SMA at $2.34. This stock is trading below $3, and so it too is an option on survival. Corinthian peaked at $36.19 in April 2004, and traded as low as $1.40 on Oct. 3, 2011. The weekly chart profile stays positive on a close this week above the five-week MMA at $2.41. My monthly value level is $2.34 with a weekly pivot at $2.79 and semiannual risky level at $4.81.

Capella Education ($45.44) is well above its 200-day SMA at $32.78. Capella peaked at $98.01 in April 2010, and traded as low as $25.81 on July 31, 2012. The weekly chart profile is positive but overbought with the five-week MMA at $40.30 with the 200-week SMA at $50.98. My semiannual value level is $41.75 with a semiannual pivot at $47.65 and weekly risky level at $51.80.

DeVry ($30.23) is above its 200-day SMA at $26.66. DeVry peaked at $74.36 in April 2010, and traded as low as $18.15 on July 26, 2012. The weekly chart profile becomes positive with a weekly close above the five-week MMA at $30.31. My semiannual value level is $27.76 with a weekly pivot at $28.58 and monthly risky level at $33.56.



ITT Educational Services ($27.20) is above its 200-day SMA at $20.94. ITT peaked at $133.75 in February 2009, and traded as low as $11.69 on Jan. 24. The weekly chart profile stays positive with a weekly close above the five-week MMA at $21.80. My quarterly value level is $16.01 with a weekly pivot at $30.71 and semiannual risky level at $32.54.

Strayer Education ($54.91) is just below its 200-day SMA at $55.62. Strayer peaked at $262.44 in April 2010 and traded as low as $42.98 on Nov. 12, 2012. The weekly chart profile stays positive with a weekly close above the five-week MMA at $52.41. My monthly value level is $41.10 with a weekly pivot at $54.53 and semiannual risky level at $60.19.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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