My new pick for our Institutional Newsletter is Pearson (PSO), who make most of those annoying tests your kids have to take in school but, more interestingly, are executing my plan to build a true on-line university system that will allow millions of people to affordably get a college education. A lot of people bailed on the stock as they have restructured and invested in digital education but I do believe it's the future and they are also making great strides teaching English in China - a huge growth market.
The real bright spot for Pearson has been its online higher education presence, led by its partnership with Arizona State University's online program. ASU Online is a leader and innovator within the online education industry. U.S. News & World Reports recently named ASU the Most Innovative College in the Nation. ASU beat out Stanford and MIT for the top spot in the survey. This recognition is evidence of ASU's position as a leader in the online higher education revolution.
Pearson saw a total enrollment in online higher education increase 24% y/y to 134,000 in the first half of 2015, attributed to strong growth within the ASU program. A key component to this increase was the strategic partnership between ASU and Starbucks (NASDAQ:SBUX). Starbucks has agreed to cover 100% of online tuition for qualified employees to ASU Online.
The program has recently been expanded to over 140,000 full- and part-time employees. This powerful connection will provide growth to ASU online enrollment for years to come. With Pearson operating as a provider and manager of Arizona State University's robust online platform, the company will benefit from the growing online higher education segment.
Pearson also has a partnership with Southern New Hampshire University, another leader and well-known online program.
We're feeling good about the year despite fall in Q1 sales: Pearson CEO
Analysts are underestimating their profit potential for the year due to a missed Q and they should be well over $800M or about $1 per share.
