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3 Groundbreaking Back-to-School Stocks

MyWallSt Staff, The Motley Fool

This article was first published by MyWallSt. Which 2 pot stocks will beat the market? Find out in our free guide!

September is upon us again, and we all know what that means. Students everywhere, young and not-so-young alike, are frantically searching for campus accommodation, bargaining over second-hand textbooks, and trying not to think about the hefty school fees that lie ahead.

A stack of books with an apple on top, next to color pencils and a stack of alphabet blocks.

Image source: Unsplash.

While brick-and-mortar education continues to boast undoubted advantages for the general student -- the prestige of traditional accreditations, the opportunity to expand one's social life -- the various alternative ventures made possible by the internet may be better-tailored to specialists in the long run. At any rate, the rise of digital education has created one of the most exciting megatrends of recent years.

Here are three companies that are poised to capitalize on these changes in education.

1. Chegg

The world of online education may resemble the Wild West in some regards, with no acknowledged leaders in the space, no Harvards or Yales to speak of, but Chegg (NYSE: CHGG) is quickly emerging as a serious contender for the title of first brand-name digital course.

Chegg's mission -- the name, by the way, is a portmanteau of "chicken" and "egg" -- is nothing less than to "Provide Overwhelming Value to Solve Students' Problems." Among the biggest of these problems is the sheer cost of schooling. One of Chegg's top solutions is its Netflix-inspired subscription service, which allows students to rent textbooks for a semester at half the cost of buying them. On top of that, the company also offers one-on-one tutoring services in a variety of subjects at bargain prices.

Students are lapping it up, too. At the beginning of this year, Chegg recorded more than 3 million subscribers, while in its most recent earnings report the company said its content had been viewed almost 200 million times. These are astonishing figures, but with almost 20 million students in the U.S. alone, Chegg's most exciting period of growth may well lie ahead.

2. K12

Founded in 1999, K12 (NYSE: LRN) is a rough contemporary of Chegg. On the surface, the two companies offer similar services, but the main difference between them is that K12 aims at a younger base. The company provides students with value in three ways: through its full-time online public schools, its individual educational products (sold directly to families), and its partnerships with traditional schools.

The company's mixture of accredited coursework and digital innovation has proven to be a hit with students, families, and schools alike. While many of its virtual courses are tuition-free, it also offers private education for as much as $7,000 annually. As a result, the company pulled in revenue of more than $1 billion in fiscal 2019, while its enrollment figures are higher than ever.

3. Bright Horizons

While Chegg appeals mostly to university students, and K12 to middle- and high-school pupils, Bright Horizons (NYSE: BFAM) is best known for its child care programs, especially its pioneering ventures in early education, which include preschool STEM training.

Partnering with over 1,100 employers ranging from the U.S. to India, Bright Horizons has a truly global presence. Wherever there are working parents, there will be a need for the company's range of services, which include everything from brick-and-mortar day care facilities to online tuition management.

Mostly due to the strength of its corporate contracts, Bright Horizons is on the verge of turning child care into big business. Indeed, in its most recent quarterly report, the company saw revenue climb by 8% year over year to $528 million, while it continues to invest in marketing and technology in a bid to deepen the Bright Horizons presence in its key markets.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Chegg. Read our full disclosure policy here.

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