A potential dark shadow over the for-profit education sector is the threat that the Trump administration will slow graduate-level student funding, according to a note from Compass Point.
The development could be positive for lender SLM Corp (SLM -1%), but negative for names such as Capella Education (CPLA +1.5%), Grand Canyon Education (LOPE +0.8%), DeVry Education (DV +2.7%) and Strayer Education (STRA +0.5%) with a high degree of graduate student exposure
Donald Trump hasn't announced his choice to lead the Department of Education yet, but for-profit education stocks have been in a celebratory mood ever since the U.S. election.
The new administration is expected to have a lighter touch with regulations and restrictions on the for-profit sector, an industry the President-elect himself is familiar with after settling a lawsuit filed against Trump University for $25M. There's been some speculation that the DOE will see a major transition over the next four years.
Education stocks rising more than 20% since the election include Strayer Education (NASDAQ:STRA), Universal Technical Institute (NYSE:UTI), Capella Education (NASDAQ:CPLA), Bridgepoint Education (NYSE:BPI), Career Education Corp. (NASDAQ:CECO), Grand Canyon Education (NASDAQ:LOPE), DeVry Education (NYSE:DV) and Chegg (NYSE:CHGG). Many of those names are now at or near their 52-week highs which brings up the question of how far the rally can extend?