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Is New Oriental Education & Technology Group Inc. (EDU) the Best Education Stock to Invest In Now?
We recently compiled a list of the 7 Best Education Stocks To Invest In Now.In this article, we are going to take a look at where New Oriental Education & Technology Group Inc. (NYSE:EDU) stands against the other education stocks.
Is the Education Sector Poised for Growth?
The education sector is undergoing a transformative phase, driven by technological advancements and shifting learning paradigms. The rise of online learning platforms and educational technology has reshaped how students and professionals access knowledge, creating a dynamic environment ripe for investment. With the global education market projected to grow significantly, now is an opportune time for investors to explore leading education stocks that are well-positioned to capitalize on these trends.
The education industry is not just about traditional institutions anymore, it encompasses a range of companies that provide innovative solutions, from online courses to tutoring services. By 2030, the market is expected to reach a staggering $10 trillion, representing over 6% of global GDP, as reported by HolonIQ by QS. This growth is fueled by a projected increase of 350 million post-secondary graduates and nearly 800 million more K-12 graduates worldwide. Asia and Africa are leading this expansion. To accommodate this student surge, the world will need to add an average of 1.5 million teachers per year, reaching 100 million teachers by 2030. Of these, 50% will be teaching pre-K and primary education. Post-secondary teaching will undergo a particularly significant transformation. The role of the teacher will evolve from a traditional role to a more mentorship-oriented approach. The K-12 education market is projected to exceed $5 trillion by 2030, reflecting the growing importance of early education and the need for a skilled workforce.
According to market.us, the global EdTech market is projected to experience substantial growth, expanding from $220.5 billion in 2023 to $810.3 billion by 2033, with a compound annual growth rate of 13.9%. North America currently dominates the market, accounting for over 37.3% of the total revenue in 2023, reaching $82.24 billion.
AI, being the hot topic for almost all industries today, has seen increasing adoption across various sectors, significantly impacting the Edtech industry. The EdTech software industry is highly competitive, with 65,000+ companies vying for market share. Over 67% of recent EdTech unicorns incorporate AI in their products and services. A good example of such a company includes Squirrel AI, a leading Chinese AI startup, that offers personalized education solutions. Leveraging a vast student database and advanced AI algorithms developed in collaboration with YiXue Education, Squirrel AI provides adaptive assessments and tailored learning paths. The company has raised $190.4 million in funding since it was founded in 2014. It has received significant recognition, including the GITEX Best Education Technology Award in 2019 and the $1 million Artificial Intelligence for the Benefit of Humanity prize in 2021.
As educational institutions recognize the importance of integrating AI into their curricula, programs like Udacity’s AI Nanodegree are becoming essential for equipping future leaders with the necessary skills. The growing reliance on AI technologies underscores a shift towards more innovative and efficient educational practices, promising substantial returns as these trends continue to unfold. This trend, together with the robust performance of EdTech, underscores the overall growth trajectory of the education sector, fueled by rising demand for innovative educational solutions and a shift towards online learning platforms. This article will delve into the 7 best education stocks to invest in now that demonstrate robust financial performance and align with current market trends.
Methodology
We sifted through ETFs, online rankings, and internet lists to compile a list of 15 education stocks with high market caps. We then selected the 7 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
15 Easiest Degrees That Pay Well
A student concentrate on their laptop in the library, taking advantage of an educational program online.
New Oriental Education & Technology Group Inc. (NYSE:EDU)
Market Cap as of October 22: $10.93 billion
Number of Hedge Fund Holders: 37
New Oriental Education & Technology Group Inc. (NYSE:EDU) provides private educational services in China and offers a range of tutoring services, including K-12 education, English language training, and test preparation. It has taken steps to diversify its business, including expanding into online education and investing in technology.
The company demonstrated strong revenue growth in FQ4 2024, up 32.08% as compared to the year-ago period. The total revenue generated in the closing quarter was $1.14 billion. The company has projected a 31% to 34% year-over-year increase in revenue for its core education services business in FQ1 2025. The company also increased its share repurchase program from $400 million to $700 million, effective through May 31, 2025.
Full-year revenue increased by 43.9% year-over-year. This growth was primarily due to a significant increase in the number of schools and learning centers, which rose by 114 and 277, respectively. The total number of schools and learning centers reached 1025.
The company is focusing on new business areas like non-academic tutoring, intelligent learning systems and devices, study tours and research camps, educational materials and digitalized smart study solutions, and exam preparation courses for junior college diploma students, along with exploring opportunities in the culture and tourism market. The expansion into these new educational business initiatives contributed significantly to the 43% increase in revenue in 2024.
New Oriental Education & Technology Group Inc. (NYSE:EDU) leverages both a robust network of physical learning centers and schools alongside its innovative Koolearn.com platform, providing a diverse range of educational opportunities. This multi-channel approach ensures accessibility and caters to the evolving needs of students, positioning it for continued growth.
Ariel Global Fund made the following comment about New Oriental Education & Technology Group Inc. (NYSE:EDU) in its Q2 2023 investor letter:
“We added a new investment position in New Oriental Education & Technology Group Inc. (NYSE:EDU), a leading after school tutoring program in China. Although the Chinese government banned K-12 academic after school tutoring, the company was able to leverage its expertise in course content quality control and standardized tutoring processes to quickly reposition itself as a leader of non-academic after school tutoring. Furthermore, we anticipate the company’s strong brand and the entrepreneurial acumen of its founder, Michael Yu, will create additional opportunities for expansion as a comprehensive educational service provider.”
Overall EDU ranks 1st on our list of the best education stocks to invest in. While we acknowledge the potential of EDU as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than EDU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
