Education stocks are outperforming the benchmark S&P 500 index as President Donald Trump seeks to dismantle the U.S. Department of Education. Grand Canyon Education and Adtalem Global Education are two stocks that would be near buy zones in a thriving market.
Grand Canyon currently hovers just below the 50-day moving average and is near an entry of 173.37, though investors should exercise caution in the current market correction. Shares broke out of an early stage flat base before pulling back to the 50-day line, according to IBD MarketSurge.
The stock then undercut the key level but rose amid news that President Trump had signed an order to dismantle the education department. According to reports, however, only Congress can unilaterally eliminate it. The Department was established in 1979.
Meanwhile, Grand Canyon's relative strength line is at a new high as seen in the blue dot on its weekly chart. That shows the stock is outperforming the benchmark S&P 500 index.
Education Stocks: Grand Canyon's Ratings
Grand Canyon stock has a Composite Rating of 95 and Relative Strength Rating of 90. The EPS Rating of 83 also sits above a normally investment-worthy threshold of 80.
Sales and earnings growth have been steady over the past eight quarters. Sales growth has ranged between 2% and 10% while earnings per share have grown between 7% and 26%.
Shares jumped to their all-time high after fourth quarter earnings on Feb. 20. sales growth decelerated to 5% or $292.6 million, and earnings per share of $2.96 also showed slower growth of 7% from the prior quarter.
But the education company's outlook for the current quarter indicated that growth would continue. Sales outlook suggested 5% growth with earnings increasing 7% from the prior year.
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Mutual funds own 57% of outstanding shares of Grand Canyon stock, though it is thinly traded. Shares have an Accumulation/Distribution Rating of C+ which shows that funds have not been net buyers of the stock over the most recent 13 weeks.
But demand for the stock remains strong. Grand Canyon stock has an Up/Down Volume Ratio of 1.2.
Adtalem Holds 50-Day Line
Adtalem rallied after second-quarter results on Jan. 31 and is holding its 50-day line in a consolidation base with what normally would be an entry at 112.44. That threshold is also the stock's all-time high.
The education stock has an ideal Composite Rating of 99 while its Earnings Per Share Rating of 98 and Relative Strength Rating of 96 are also high. The relative strength line is also at a new high but this too is a thinly traded stock.
Sales and earnings growth has been steady over the past six quarters. Its most recent quarterly report showed that both sales and earnings accelerated from the prior quarter. Sales grew 14% to $447.7 million while earnings of $1.81 per share showed a 47% increase.
Mutual funds own 67% of outstanding shares. More funds have been net buyers in the past three quarters.
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