Lincoln Educational Services (LINC) - Best Stock to Buy During a Recession
We're currently in commencement season for high schools and colleges. All across America, important speakers are telling freshly-minted grads that chapters are turning, breezes are blowing and all sorts of torches are being passed.
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Leaving the soaring rhetoric aside, the job market these graduates face is bleak. Wall Street is gearing up for Friday's jobs report from the Labor Department, and the news will almost certainly be bad. The economy probably shed another 525,000 jobs last month, and the unemployment is expected to climb over 9% for the first time in over 25 years.
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Over the last year, the American economy has lost over five million jobs. This has put enormous pressure on folks in more fragile states of our economy. Young doctors and lawyers will do just fine eventually. The real problem is for lots of adults who may have a few years of secondary education, but who must now invest in themselves to improve their job prospects.
It's because of workers like this that I'm a big fan of for-profit education companies. They serve an important need for older workers who are motivated to go back to school, but who don't need to spend time at their local university. The good news is that many of these firms are publicly traded. One of my favorites is Lincoln Educational Services (LINC), which is based in West Orange, NJ.
Lincoln focuses on career training and degrees programs in fields like automotive technology, health sciences, culinary arts and information technology, among a host of other fields. More than 20,000 students are enrolled at some 40 Lincoln campuses in more than a dozen states. In reality, Lincoln is about the size of many state universities.
Enrollment Is Up Over 33%
Lincoln Educational has been expanding its facilities and areas of study, as well as entering new geographic markets. It couldn't come at a better time as more Americans are heading back to school to polish their resumes in today's highly-competitive job market. As the unemployment rate continues to trend upwards, more workers are enrolling in classes, and Lincoln is seeing business boom.
The company recently announced that its first-quarter earnings rose by eleven-fold to 22 cents per share, compared with two cents per share in the same quarter a year ago. Wall Street was expecting six cents per share.
That's simply stunning in any economy, let alone one of the worst bear markets we've ever seen! During the same period, the company's sales rose 41.1% to $118.6 million, compared with $84 million in 2008. In the past year, the number of new students flocking to Lincoln's schools jumped an impressive 42.4%, and its total student population increased by 33.7%. Compare that to Williams College, where applications have dropped by 20%.
Lincoln Educational is clearly benefiting from increasing enrollment. In addition to laid-off workers heading back to school for retraining, more younger members of the workforce are delaying their quest for a career by staying in school. Due to its rising number of students, the company increased its forward-looking sales and earnings guidance.
Lincoln Educational Services is a great buy.
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