Online education is becoming a bigger business all the time, which is why the actions of Houghton Mifflin Harcourt (NASDAQ: HMHC), Chegg (NYSE: CHGG) and GP Strategies (NYSE: GPX) run higher. Digital learning was already in full swing when the pandemic hit; The Covid has only accelerated this trend.
Houghton Mifflin Harcourt up 18.73% Monday, at $ 7.10, following news that the publisher announced that it would sell its consumer books division to News Corp. (NASDAQ: NWS) for $ 349 million in a cash transaction.
It was not the addition of $ 349 million to the income statement that prompted investors to bounce back. This is where HMH plans to grow its business next: the company said it will now focus solely on K-12 education, developing a recurring revenue model through apprenticeship programs. digital.
The company was already moving in this direction. In October 2020, it announced a strategic restructuring, designed to accelerate its transformation into a digital learning company. Its goal is to support students and educators with technologies applicable to distance, in-person and hybrid educational environments.
The company has not been profitable and analysts don’t see that changing any time soon, although Wall Street is seeing its losses narrowing. For 2021, analysts are pegging the loss at $ 0.72 per share, an improvement from the loss of $ 3.82 per share in 2020, when school closures due to a pandemic hurt results.
HMH shares are up 113.21% year-to-date and 238.10% year-on-year. He added to those gains in Tuesday’s session.
As you can guess, at this level of price appreciation the chart shows strong bullish action over the past few months. March marks its sixth consecutive month of earnings. Unfortunately, there hasn’t been a lot of above-average trading volume, which is less than ideal. You would rather see a strong turnover, a signal of institutional support, as stocks soar.
The stock is currently extended 5.4% from the resistance at $ 7.20. Investors should be cautious about buying an extended share, as it would be easy to get rocked by a downturn.
Chegg, which specializes in online tutoring, as well as programs that help students solve problems using online videos and exercise sets, grew 124.41% over the course of the year. last year.
In 2021, the stock corrected after retreating from its Feb.16 high of $ 115.21. It is finding support above its 200 day moving average, so the correction is nothing to worry about at this time.
It is not uncommon to see a pullback after a protracted rally, as institutional investors take their profits. The current market-wide recovery dates back a year, so it wouldn’t be surprising to see investors take money off the table as their investments are considered long-term capital gains, which are taxed at a lower rate than short-term earnings.
This company managed to make hay in 2020, increasing its profits by 43%, to $ 1.34 per share. The company has been profitable every year since 2016, with analysts forecasting a 23% increase this year, to $ 1.65 per share.
Chegg, who started life as a textbook rental company, is looking to a more digital future. It’s still in the textbook rental business, but even that has gone digital. Chegg continues to develop its suite of tools to help students navigate an educational environment that will be a hybrid of in-person and online.
Analyst consensus price target calls $ 105.29 per share, upside potential of 26.42%.
Generalist strategies is a small cap stock that has collapsed over the past year. This is another type of online training business as it specializes in training for businesses and businesses. In an era when business travel has been reduced and more people are working from home, online training has proven to be a good solution.
Analysts don’t expect demand for corporate online training to slow after the pandemic. Income is growing 33% this year, to $ 0.96 per share, and 23% next year, to $ 1.18 per share.
GP Strategies stock is up 43.68% year-to-date and 163.37% in the past year. Shares closed at $ 17.56 on Tuesday, up $ 0.52 or 3.05%.
The stock gained 6.34% on March 16, hitting a new high of $ 18.24. It has since pulled back and is consolidating close to its 10-day moving average. It stretches from a cup breakout with handle above $ 13.48 and is currently nearly 5% above its 10 day line, which means it can be risky to initiate a purchase at this point.
However, investors should keep an eye out for the next pullback in the moving average which could offer a new entry point.