For the second trading session in a row, Lincoln Educational Services (NASDAQ:LINC) stock posted a solid gain on Tuesday. The company’s shares continued to benefit from bullish momentum sparked by its impressive third-quarter earnings report and similarly encouraging results from a peer. Its shares closed Tuesday more than 4.5% higher.
The right kind of peer pressure
That peer is American Public Education (NASDAQ:APEI). It published its third-quarter results after market close on Monday, and its stock rose the following day. That was mainly thanks to enrollment increases in both of its core operating divisions and to management’s top- and bottom-line guidance revisions.
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This will sound familiar to Lincoln Educational shareholders, as these dynamics were at play in their company’s third quarter. What also helped Lincoln was its double-digit increases in student starts, population, and overall revenue — and, yes, a guidance raise.
This, along with the recent quarterlies of other education stocks, suggests that demand is rising for the vocational and specialty learning services these companies provide.
Learning what’s behind a growth sector
To me, two key factors are contributing to that demand. The first is the shortage of skilled trade and technical workers in the U.S. This has been caused, in large part, by several generations that have placed a premium on “traditional” college and university degree programs over vocational learning. The second is the ever-rising cost of such programs, which has made them harder to afford for many Americans, particularly amid rising consumer prices.
These feel like durable mid- to long-term trends, as I don’t see the causes behind them melting away anytime soon. I think the education sector will continue to post encouraging growth, and I’d consider its better stocks to be buy candidates — Lincoln Educational included.
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