Education stocks might not be the first sector that springs to mind when searching for new investment opportunities. However, online learning became a booming industry in response to the COVID-19 outbreak.

There are some exciting and profitable business opportunities for education companies. Investors could make big gains, too. Let’s take a closer look…

Education Stocks

Educations Stocks and COVID-19

The pandemic had a major impact on the education system. A 2020 UN policy brief revealed that the virus has affected nearly 1.6 billion learners in over 190 countries. The physical closure of schools and other learning spaces impacted 94% of the student population on a global scale. In low and lower-middle-income countries, the figure was as high as 99%.

While the education sector has had to adjust to the turbulent effects of COVID-19, it has fared relatively well. Even though education systems took a hit, stay-at-home orders and the closing of schools and campuses sparked innovation among some education companies.

Overnight, schools and institutions were forced to adapt to new education strategies. Since the pandemic, the education system has faced breakthroughs in online teaching, self-taught learning and virtual check-ins. And some of these education stocks have had a huge impact behind these innovations.

I’ve gathered seven education stocks worth looking at in 2022. To make things easier, I’ve included highlights on what makes these companies worth considering. Let’s take a look…

Top Education Stocks

Here are the best education stocks to consider adding to your portfolio…

  1. Chegg (NYSE: CHGG)
  2. Zoom (Nasdaq: ZM)
  3. Pearson (NYSE: PSO)
  4. 2U (Nasdaq: TWOU)
  5. Stride (NYSE: LRN)
  6. Tal Education (NYSE: TAL)
  7. New Oriental (NYSE: EDU)

1. Chegg

Chegg is a leading direct-to-student learning platform. The platform targets high school and college students. It was founded in 2005 and is headquartered in Santa Clara, California. In its prospectus, Chegg stated…

We help students study more effectively for college admissions exams, find the right college to accomplish their goals, get better grades and test scores while in school, and find internships that allow them to gain valuable skills to help them enter the workforce after college. We strive to improve the overall return on investment in education by helping students learn more in less time and at a lower cost.

The company offers several Chegg services and required materials through its paid subscription model. These include…

  • Study (help with homework)
  • Writing Tools (online writing tools)
  • Math Solver (math problem solver)
  • Tutors (online tutors)
  • Thinkful (online skills-based courses)

This online education stock also offers a variety of materials for students. These include printed and online textbook rentals and purchases, internships, college admission services and scholarship services. This online education stock has a lot to offer to all different types of students.

2. Zoom

Zoom Video Communications is a video communications company that gained much of its fame during the pandemic. Many instructors used the platform to conduct their online classes when schools shifted to online learning.

Zoom serves a variety of different businesses. Its popularity exploded in 2020 as the pandemic turned Zoom into a household name. And even as schools and offices continue to reopen, some schools have shifted to be permanently remote or a hybrid model of in-person and online learning.

The pandemic gave many people a new perspective on online learning. And while Zoom stock cooled off after the initial buzz, this is a good sign that this online education stock still has plenty of potential to grow.

3. Pearson

Pearson is the largest education company in the world. The company was founded in 1844 in London, England. Pearson provides material, testing and online services to schools, colleges and universities.

The company is a leader and pioneer in providing educational products and services to governments, educational institutions and corporations across the globe. Its portfolio consists of operations in nearly 200 countries around the world with more than 20,000 employees.

The company operates through five operating segments. Pearson’s five key business divisions include…

  1. Virtual Learning
  2. Higher Education
  3. English Language Learning
  4. Workforce Skills
  5. Assessment and Qualifications

Pearson is a leading provider of test development, processing and scoring services. Over 300 professional assessments are available, as well as large-scale and admissions assessments. On Pearson’s website, the education company stated…

We currently serve approximately 300,000 professionals in the US with assessments for psychologists, speech-language pathologists, occupational therapists, and other related fields… Our large-scale assessments help state, district and school leaders make informed decisions and help learners reach their potential. At Pearson, we partner with schools and educational professionals at every level to help enhance instruction and improve learning outcomes.

4. 2U

2U was founded in 2008 by Christophe Paucek, Jeremy Johnson and John Katzman. The online education stock partners with over 230 university partners to provide undergraduate and graduate degree programs. 2U also provides professional certificates, boot camps and short courses.

Regarding 2U, Kent Syverud, the chancellor and president of Syracuse University said…

2U is top quality, delivering an educational experience that’s better than in person. Truly, it’s engaging to the core, and that means a lot to us.

The company offers over 3,600 digital programs. 2U has reached over 42 million users by partnering with top universities. The company signed its first contract with the University of Southern California in 2009. Soon after, major universities such as Georgetown, UC Berkeley and Yale followed suit. This education stock is helping to lead the way in learning for college students and beyond.

5. Stride

Stride is an education management organization. The platform offers virtual learning as an alternative to in-person schools or homeschooling. Schools can also collaborate with the platform to supplement and enhance students’ learning inside the classroom.

This online education stock was founded to create a uniform curriculum for homeschooled children. But the company’s mission has grown far beyond that. The company aims to help students of all ages help reach their full potential through personalized learning.

Stride’s mission has become eye-catching to many parents concerned about sending their kids back to schools due to Covid-19. The platform also serves school boards seeking alternatives to develop combined hybrid and in-person school reopenings.

Schools are reopening with the continued roll out of the vaccine. But online education has been the norm for many students for the last couple years. And many people are beginning to see it as a more convenient, safer alternative to in-person learning. This could make Stride a good long-term education investment.

6. Tal Education

Tal Education is a China-based education stock. The platform is a leading K-12 after-school tutoring services provider.

Tal Education offers tutoring services covering a wide variety of subjects. Tutoring is available for students in math, physics, chemistry, biology, history, geography, political science and more.

It offers tutoring services to students through three different learning formats. Students can choose to learn in a small class format, personalized premium services or online courses.

Because this is a China-based education stock, you should be aware of the risks if you decide to invest. These stocks have recently faced high volatility due to the crackdown on regulations.

7.  New Oriental

New Oriental is the largest virtual educational service in China. And that’s no easy feat – China is the largest education system in the world with 260 million students in about 514,000 schools.

The online education stock offers a wide range of educational programs, services and products. The platform is most known for its K-12 student tutoring services. Other services include private learning centers, online education programs and test preparation services.

As of February 2021, New Oriental reported a network of over 1,600 learning centers and over 48,000 teachers in 104 cities. Nearly 65 million students use the platform, according to the company website.

New Oriental was founded in 2001 and has continuously grown since. But recent tightening around China’s education, crypto and tech sectors has raised some red flags for investors. China’s government recently released a double reduction policy last month. The regulations include requiring tutoring and education service companies to convert to nonprofits.

In doing this, businesses will no longer be able to raise capital or go public, according to a Bloomberg report that cited people familiar with the matter. Already public companies would “also probably no longer be allowed to invest in or acquire education firms teaching school subjects while foreign capital will also be barred from the sector, one of the people said,” Bloomberg reported.

The Final Line on Online Education Stocks

Education stocks are well-positioned to benefit from innovations in the sector. Education can be a good sector to help diversify your portfolio, but you should always be aware of the risks. Research plays an important role here. The return of any investment is never guaranteed.

Furthermore, if you’re interested in other education-related investing opportunities, check out the recent PowerSchool IPO.