Education will be a $10 trillion market. Here’s how to pick stocks that will benefit
The global education market will hit an astonishing $US10 trillion by 2030, according to education researcher HolonIQ.
Population growth in developing markets is fuelling “a massive expansion” while technology drives “unprecedented re-skilling and up-skilling in developed economies”, the group says.
“The next decade will see an additional 350 million post secondary graduates and nearly 800 million more K12 graduates than today.”
Thart’s good news for the two dozen or so ASX stocks focused on education (see table below).
A quick review of the list shows ASX education stocks have gained on average about 60 per cent over the past 12 months — though picking the right ones can be tricky.
What’s the perfect education stock? Asia-focused, high-tech educators tackling higher education and vocational according to the research.
Online educators that are fast adopters of new technologies such as cloud-based services, Artificial Intelligence and even gamification should be particularly well placed, according to researcher ResearchandMarkets.com.
The global online education market is growing at 10 per cent per year and is expected to hit $US287 billion by 2023 — up from $US160 billion in 2017, the researcher says.
>> Scroll down for a table of ASX-listed education stocks showing their performance over the past 12 months
While North America “leads the way for the online education market owing to the high adoption rate of such technologies”, the Asia Pacific region is “is bound to become a major market in the upcoming years”.
That matches forcasts by Austrade which say China, India, Vietnam, Thailand, Nepal, Malaysia, Brazil and South Korea will be the biggest markets for Australian educators by 2025.
“Australia’s onshore international education sector is forecast to grow from 650,000 enrolments [in 2015] to 940,000 by 2025.”
Higher education and vocational training are the two key sectors to watch, Austrade says.
That all fits pretty well for iCollege (ASX:ICT) an online educator heavily focused on Asia.
Since a few wobbles last year, the $40 million company’s shares have gained almost 700 per cent in the past year, selling at around 8c, up from 1c this time last year.
The online training company comprises of seven subsidiary businesses, including iCollege, Bookkeeping School and iStudy Australia.
Another high-tech play, 3P Learning (ASX:3PL) is focused on younger students.
The $170 million company owns well-known online learning resources like Mathletics, Spellodrome and WordFlyers. It has seen a 27 per cent increase in share price over the past year, hitting $1.23 yesterday.
In December last year, Mathletics alone had 5.6 million global users.
RedHill Education (ASX:RDH) is focused on importing European students from its agency businesses in Spain, Italy and France to undertake study down under.
It’s seen significant shareholder support, rising 145 per cent in the past year. It’s trading around $3.70 and has a market cap of about $105 million.
RedHill is well placed to capitalise on Australia’s increasing onshore international education sector, which according to AusTrade is forecast to grow to nearly a million enrolments by 2025.
It’s not all roses among education stocks however.
Kneo Media (ASX:KNM) is trying to crack the US market with its “gamified” learning software targeted towards special education students.
Kneo had a strong run-up late last year — but it’s drifted down ever since.
Janison Education (ASX:JAN) provides the software for online NAPLAN tests and school exams, and told investors in June that, thanks to its software, 670,000 students had been able to complete the NAPLAN Online project in nine days.
“99.9 per cent of students were able to complete the assessment without technical problems,” Federal Education Minister Simon Birmingham said at the time.
That could be a big opportunity because of Australia’s less-than-stellar recent Naplan results.
NAPLAN results hit the streets earlier this week, and the news wasn’t great, with writing results hitting record lows.
An Australian Research Alliance for Children and Youth report earlier this year found that three in 10 grade four students aren’t meeting minimum maths standards, one in four are below standard in science and one in five are not reading at the required level.
Janison is up 33 per cent year-on-year to about 40c.
Child care centres also make up a subset of the education section of the ASX, though they are not performing quite as well.
G8 Education (ASX:GEM) is down 45 per cent over the past year, and it reported fallen half-year profit today amid challenging industry conditions.
Similarly, Think Childcare (ASX:TNK) is down 18 per cent year-on-year.
Those stocks are doing better than some, however.
Vocational training provider Australian Careers Network remains listed on the ASX, despite the fact that it collapsed in 2016, which left 15,000 students without courses.
Then there’s Vocation, which in late 2015 entered voluntary administration and shut down a week later, costing 150 employees a job and leaving 10,000 students in limbo.
Inteuri Education was delisted from the ASX in early 2017.
Here’s a table of ASX-listed education-related stocks showing their performance over the past 12 months:
Scroll or swipe to reveal table. Click headings to sort