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Strategic Education: Monitor This Safe Investment Choice

Jun. 09, 2020 6:13 PM ETStrategic Education, Inc. (STRA)4 Comments
Arrancar Capital profile picture
Arrancar Capital


  • STRA is a recession resistant stock that is attractive in the face of prolonged economic declines.
  • Plans of growth supported by macro conditions tell a good story about the firm.
  • Shares are appropriately priced at $184.48 (vs target price of $167.60).

Strategic Education (NASDAQ:STRA), formerly known as Strayer Education, provides education services through two fronts - campus-based (Strayer University) and online-based (Capella University). We are issuing a HOLD recommendation for the company with a target price of $167.60. Our core thesis for this stock is that the firm's campus growth plans will enable the company to thrive even in the face of recessionary periods. Although the stock seems slightly overvalued, investors seeking a safe and defensive stock in their portfolio can make an entry when weakness presents itself if prices were to decline.

Source: Strategic Education


The company has two main subsidiaries - Strayer University and Capella University, representing 54% and 46% of total revenues, respectively.

Source: Company Annual Report

Founded in 1892, Strayer University offers 31 undergraduate and graduate degrees such as Business Admin, Accounting, IT, Education, Healthcare, Criminal Justice at 77 physically campuses spread across southern and eastern US. The university has been expanding over the past few years, building 3-5 campuses annually.

Campus Locations; Source: Strayer University

A Strayer University Campus; Source: Inside Higher ED

On 1st August 2018, the company completed its merger with Capella Education, an online-based university that provides a variety of undergraduate and graduate degree programs, primarily targeting working adults. The programs span across 6 primary disciplines in Public Service, Nursing and Health Sciences, Psychology, Business & Technology, Counselling and Human Services and Education. The acquisition was an attempt to diversify and to ride on the growing trend of learning online. Leveraging on the company's expertise in opening brick-and-mortar campuses, the company has opened its first physical campus center in Atlanta.

Source: Campus Technology

The company plans to continue pursuing its aggressive expansion with 4-5 new campuses in 2020 and possibly 4-5 additional campuses later in the year, pending US's recovery from the coronavirus

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