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Chegg- At the Head of the Class

With annual revenues of $255 million, Chegg Inc. (CHGG) helps students study for college admission exams, find colleges, get grades and test scores while in school, and find internships that allow them to gain skills to help them enter the workforce, explains Leo Fasciocco, editor of Ticker Tape Digest.

The company also matches domestic and international students with colleges, universities and other academic institutions in the U.S. It sells eTextbooks for rent and sale.

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Chegg also provides tutors on its connected learning platform available to students online, anytime, anywhere through its Chegg Tutors service. And it provides access to internships to help students gain skills that are critical to securing their first job.

The stock's long-term chart shows the stock coming public in late 2013 at $8.29. The stock dipped to an all-time low of $3.15 by early 2016. However, since then, the stock has been trending higher having made about a 10-fold move.

The daily chart shows the stock forming a long-term type cup-and-handle base. Technically, the stock has broken out with modest volume. The push to a new all-time high is very bullish.  

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Profits for the fourth quarter are expected to leap 40% to 21 cents a share from the 15 cents the year before. The highest estimate from 7 analysts is at 23 cents a share.

Net for 2018 is expected to surge 79% to 50 cents a share from the 28 cents the year before. The stock sells with a price-earnings ratio of 16. We see that as attractive for value investors.

For the first quarter of 2019, net is expected to be only flat at 10 cents a share. However, the highest estimate is at 13 cents a share. Net for this year is expected to climb 27% to 63 cents a share from the anticipated 50 cents for 2018.

The company beat the Street estimate the past four quarters by 4 cents a share, 4 cents, one cent and two cents. We are targeting the stock for a move to $40 off this breakout. A protective stop can be placed near $31.

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