Hey Richard,

I agree with you that the educational companies have been on a tear of late. They have done well in past recessions. From a quality standpoint, it looks to me that STRA is "best of breed" followed by ESI and APOL.

I attached an updated SSG for STRA. My growth judgments are at the low end of the analysts I checked, including Value Line.

I used a high PE of 28 which is 1.5 times greater than the EPS growth rate. I used a low PE of 20; the 52 week low PE was 25.3 and  occurred on 3-16-09. The 5 year average low PE from PERT B has been above 20 since 2004.

I have a buy price of $193.01. I took the average future PE of 24 and multiplied it by the future EPS of $15.54 = $372.96. I added the dividends over the next 5 years with 18.6% EPS growth and 23% payout. That gives me a total price of $386.02. To double my $$ in 5 years, I will need to buy shares at 1/2 that price, or $193.01.

How does that compare to your buy price?

Pat Landers

Pat,

Thanks for posting your SSG.  I was a bit more conservative on the estimated growth, but did not pull back as much on my average high/low PE's.  Our bottom line numbers ended up being similar.  I just looked at Take Stock again and they rate it a 10. Manifest Investing also rates the stock highly.  Heck, I can't believe I found such a highly rated stock within the buy range.

Thanks for the second opinion.

Jeanie

STRA Online Stock Study on 10-7-09

Strayer Education (STRA) will be discussed as the Online Stock Study at the BI website on 10/7/09.  Ken Kavala, a BIVAB director and a small stock guru, will lead the study. 

You must be a BI member to participate and/or to download the completed study materials (the recorded presentation, presentation slides, VL, and other handouts).

Armin

Hey Jeanie,

At the current price, STRA is a little overvalued for me. I try to buy shares at the forward looking average PE rather than the high PE. I would buy or add shares if the price goes to around $195. I think ESI and APOL look more fairly priced at their current levels. 

I did a "First Cut" study on STRA at the better investing web site. You can see my judgments there if you are interested.

Pat Landers

Thanks for the feedback Pat.  I'll look at the First Cut study.  I was more comfortable with the low $200 price range, because when I look up the stock on the Take Stock summary, that evaluates the top end of the buy price as $214.63.  Now I get to figure out why Take Stock is so much higher.  I've always found Take Stock to be very conservative and rarely am I at a buy in point from their numbers.  When looking at the historical prices, it looks like STRA has not been in that range since July 13.  However, I am a very patient investor. 

Thanks again,

Jeanie

Thanks for the heads up Armin.

Jeanie

Is anyone buying share of STRA at the current price? It looks like a buy to me.

Pat Landers