Only a handful of
the online schools
market themselves to
US service
members...
Jim:
On Thursday I threw
all of the online
education stocks…
one of the few
remaining groups
with strong secular
growth in this
downturn… meaning
they don’t depend on
the economy… not
like they don’t like
religion… I put them
all on the Sell
Block… with one
speculative
exception…
American Public Education,
Inc. (APEI)…
I recommended this
one a month ago
and it is up 13.3%
since then… even
though the market
has been horrendous…
it hasn’t run as
much as the other
names in the group…
and it has some
advantages that they
others don’t… all of
the education names
benefit when the job
market dries up…
because people go
back to school… a 1%
increase in
unemployment usually
leads to a 2%
increase in
enrollment… and
enrollment in online
schools is growing
much faster 12%
rate… than the old
fashioned brick and
mortar and textbook
places…. what sets
APEI apart from all
the other onlines is
that most of its
students are either
in the military or
they are military
affiliated… and the
company caters to
their needs by
having 24 semesters
in any given year..
making it easier for
soldiers who are out
on deployment to
come back and take
classes.
Only 30% of enlisted
soldiers hold
bachelor degrees…
and under graduate
tuition at APEI is
60% cheaper than at
state schools… 90%
cheaper than
graduate tuition at
state schools…
unlike other
employers the U.S.
military isn’t
cutting back on
student aide… which
makes me feel like
APEI is a better
play than its peers…
for those of you who
believe in technical
hocus pocus… Dan
Fitzpatrick, my
colleague at
TheStreet.com, where
I am chairman… and a
guy who looks at
charts every day…
thinks that APEI’s
chart indicates that
there is a lot of
interest in the
stock between $38
and $40 and it is
building a base…
meaning new share
holders are
gradually buying and
eager to buy on a
pull back… unlike
the charts of the
other online
education stocks…
which remember
Fitzpatrick said
toppy… a piece of
technical mumbo
jumbo meaning the
stocks have run out
of steam… my
opinion… I think
APEI is worth buying
but on a pull back
below $40... the
stock has run… the
growth here is just
tremendous… the
company is expected
to grow revenues at
41% this year… and
earnings at 44%… and
then again it is
trading at 35.6
times earnings…
which is a big
multiple in this
market… although
historically money
managers have been
willing to pay a lot
more for this level
of growth… still the
stock has had a
decent size move
since I recommended
it in January… I
want to get some
more collar on how
things are doing…
before I tell you to
pull the trigger…
even on a pullback…
so let’s talk to
Wally Boston, he is
the CEO of
American Public Education,
Inc. (APEI).
See all
of
tonight's
stocks
mentioned
on
Yahoo!
Finance,
here...
Monday,
February 9, 2009
(Cont'd from
above)...
Jim (cont'd):
Jim:
Mr. Boston welcome
to Mad Money...
Wally:
Thank you Jim,
it is great to be on
your show. I am a
big fan.
Jim:
Mr. Boston, thank
you. Online
education adoption
has been
accelerating, why do
you think that is?
Wally:
Primarily
because of
convenience, if you
are a working adult
and you work
downtown and you
live in the suburbs,
and the college that
you want to go to
may be in another
suburb or may not
even be in town, you
can go home and feed
your kids, finish
paying the bills and
then sign onto your
computer and do your
work. That is
probably the number
one reason, the
number two reason is
that there have been
significant number
of studies that have
been done, that show
that you learn just
as well online, if
not better in some
cases, than you do
in a residential
class.
Jim:
Probably ten years
ago, I know when I
started
TheStreet.com people
felt that no one
would ever get their
news necessarily on
a screen. That they
were used to the
tactile nature of
paper, they loved to
have the paper
delivered. Are we
going to look back
at this year, and
think… wow, that was
a period when only a
very small
percentage of people
went to college
online… and now all
our kids go online?
Wally:
I think that is
a distinct
possibility. I think
with the
technological
implications and the
fact that our
children are digital
natives vs. those of
us who grew up
without computers
and migrated to
them. The
possibilities are
endless. The
technologies are
being introduced
into education every
day, that help us do
a better job of
providing good
outcomes for our
students.
Jim:
And this would be
just like to me what
online did this…a
lot of traditional…
whether it be bricks
and mortar vs.
Amazon… or whether
it be Google vs. a
lot of authoritative
text… but you would
actually break the
whole core structure
of education… which
is out of control,
right?
Wally:
I think it has
gone out of control,
there was a study
just released the
other day, where the
American public
believes, 67% of
them believe that
college has become
unaffordable for
most people. In our
particular case, we
pride ourselves that
we have held our
tuition flat, for
under graduates, for
eight years.
Jim:
Now, right now we
have very big ROTC
programs… which are
fantastic… a lot of
the kids that go to
my daughters high
school go to college
via ROTC… but is
this not a less
expensive way for
kids to go to
school? At least by
the point of view
from the government?
Wally:
Absolutely,
particularly if you
are able to live at
home with your
parents where there
is no additional
room and board
charge, and you can
take your classes on
line. It is a lot
less expensive.
Jim:
And talk about the
adoption in the
military… how does
it work… is it all
by word of mouth… or
do the officers tell
them they can do
this… how do they
find out about it?
Wally:
Well, in the
military to
participate in their
academic programs
you have to be in an
accredited school.
And soldiers, and
sailors, and airmen
are allowed to sign
up for any of the
accredited schools
that are on the
list, and there is a
couple of thousand
schools. But in our
particular case, we
receive over 50% of
our new students
come to us, hearing
about us from a
friend or a fellow
student. And that is
a big statement on
the quality and the
effectiveness of our
programs.
Jim:
What is the new…
there is a big, I
think fantastic… to
be applauded… from
the previous
administration… GI
bill. What does it
mean for you guys?
Wally:
First and
foremost it is a
great bill for the
soldiers. It is a
reward for their
serving in combat in
Afghanistan and
Iraq, and it
provides a benefit,
primarily two big
things. One it pays
for much higher
tuition schools, and
in our particular
case because we
pride ourselves on
keeping our tuition
low, our tuition is
affordable now. But
even more important
to soldiers who
serve a certain
length of time, it
allows them to
transfer that
benefit to their
dependent, such as
their spouse or
their children. So
if they use the
tuition assistance
to pay for their
degree while they
are active duty and
save their GI bill
benefit to transfer
to their spouse and
dependents, we think
that is going to be
big. Particularly
for some one who has
a very good
reputation within
the military within
the long run.
Jim:
Yeah, that does
sound big… I think
that is going to be
huge… Mr. Wally
Boston, President
and CEO of American Public Education,
Inc. (APEI),
thank you so much
for coming on Mad
Money.
Jim's
comments AFTER the
interview:
You can hear why
this is a great
growth story… I
struggle to find
what could go wrong…
other than the stock
is expensive… and
the stock is not
expensive vs. its
growth rate… I
really do wonder if
we will look ten
years from now and
wonder say did we
send out kids to
these campuses for
$80,000 a year when
they got a better
education on line… I
think that is
probably coming.
