Three Education Stocks Highlighted in MarketSmith Scan
The markets were weak leading into the weekend, yet these three education stocks popped up on a relative strength scan highlighted by our MarketSmith mobile app. Two candidates are domestic stocks, while one is a Chinese tutoring company that frequents the IBD50 List each weekend.
MarketSmith Relative Strength Scan
LRN and LOPE are in the online computer services and education industry group. TAL is a Chinese online education and tutoring services provider. All three have frequented the IBD50 List. LRN and TAL have reported earnings last week.
K12 (LRN) – Post Earnings Fundamental and Technical Data
K12 Inc. (LRN) is an education management organization that provides online education curricula designed as alternatives to traditional “bricks and mortar” education for public school students from kindergarten to 12th grade. The company operates in 33 States and the District of Columbia.
K12 (LRN) PT Raised to $25 at Barrington Research
Funds have been adding shares to portfolios during the current quarter, with the company reporting an earnings surprise of 45%. Shares rose on the highest volume to date as the stock broke out of a 16-week flat base.
K12 (LRN) Earnings Highlights
The company exceeded quarterly views last Wednesday with a loss of 22 cents a share; analysts expectations were for a 40-cent loss.
Revenue rose 10%, a significant increase to $251.3 million. Estimates averaged $226.8 million.
K12 management highlighted a 6.9% enrollment increase compared to last year.
K12 Guidance – Point to Improving Conditions
The Virginia-based company also gave upbeat guidance for full-year. K12 expects revenue between $1 billion and $1.01 billion, significantly above consensus forecasts for $951.2 million. Management looks forward to adjusted operating income to range from $56 million to $60 million, a 20% improvement, for the current fiscal year ending in June.
The K12 weekly MarketSmith chart depicts a much larger cup forming prior to the recent 16-week base. RS line is climbing rapidly, confirming relative strength in a weak market.
Grand Canyon Education, Inc. (LOPE)
Grand Canyon Education, Inc. (Nasdaq: LOPE) reflects relative strength (RS line climbing / 92) as it builds a potential consolidation pattern. Considering strength in the group. We will considering adding Grand Canyon (LOPE) to our watch list this week.
Grand Canyon Education (LOPE) offers post-secondary programs for students via its online system and its Arizona Campus, sporting an Investors Business Daily Composite Rating of 95. Over the past two years, LOPE has shown a history of beating estimates for seven (7) quarters. The company has scheduled earnings after market close on Thursday, November 8.
MarketSmith data for the September period shows funds continue adding to portfolios.
Chinese stocks as a group have performed poorly for most of 2018. A handful of candidates show price action breaking downtrends while moving back above short-term 9/20ema. This change in direction should be monitored over the next few days.
TAL Education Group – (TAL)
TAL Education Group, through its subsidiaries, provides K-12 after-school tutoring services to 3.9 million students via 594 learning centers across 42 cities in the People’s Republic of China.
TAL will break its downtrend this week if bulls continue pushing price action back towards the 200d. The 50d was breached on Friday, following above-average volume the entire week, surging +124%. We will considering adding TAL to our watch list this week.
Funds have reduced positions into the September period. Given the 33% earnings beat on Thursday, we are looking for volume to confirm institutions will again build exposure in TAL in the weeks ahead.
We’ll track the progress of these candidates today and assess for potential positions. Stay tuned and join us during our LIVESTREAM broadcast during market hours. Watch, listen and trade from 9:20 AM to 4:15 PM Monday through Friday.
Futures are pointing to a gap higher this morning.
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