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How to Profit from the GAO For-Profit Education Leak
Posted By Jim Nelson On August 10, 2010 @ 12:58 pm In Featured,Investing Strategies,Macroeconomics | No Comments
On Tuesday of last week, a Government Accountability Office report on for-profit education companies was leaked to the press. And its contents absolutely shocked the majority of the education industry and wrecked a slew of stocks.
Today, I’m going to show you an investment opportunity that is both tied to this devastating news story, as well as safe from its downside…
Iowa Democratic Senator Tom Harkin, heads the Health, Education, Labor and Pensions Committee, which just launched what is expected to be a six-plus month investigation on the for-profit education industry. The findings of this investigation could have an enormous impact on the multibillion-dollar industry.
The leaked document featured a scathing look at how admission and recruitment offices at for-profit firms do business. The GAO sent undercover applicants into 15 for-profit colleges. All 15 schools made “deceptive or otherwise questionable statements to GAO’s undercover applicants.” Harkin’s committee is furious. At the first of the hearings, Sen. Al Frankin berated an agent from one of the national accrediting agencies — the very agencies that are supposed to be looking for frauds in these schools.
Harkin, himself, noted that this is going to be a long process, claiming “the evidence points to a problem that is systemic to the for-profit industry.” Of course, ten or 15 years ago, this wouldn’t have amounted to much. But today, the for-profit industry cashes in 20% of federal Pell Grants, even though only 6% of students enroll in its institutions. That amounts to billions of dollars. Just this school year, the University of Phoenix – the largest of the for-profits – received more than $1 billion in Pell Grants.
The massive growth in this field has led to many investment opportunities. University of Phoenix’s parent company, Apollo Group Inc (NASDAQ: APOL ) rakes in nearly $4 billion in revenue per year. For penny investors, Corinthian Colleges Inc (NASDAQ: COCO ) appears fairly undervalued right now.
But with the recent Washington hailstorm in the for-profit landscape, I wouldn’t jump in right this second. We could see significant legislative changes in the next 12 months that could negatively affect this industry. But if you’re still looking to bank some money in this fast-growing industry, you’re in luck…
I just found a backdoor play in this moneymaking sector that is both a double-digit grower and has a global stature. Last year, this company pocketed more than $8.2 billion from operations in more than 60 countries. Just this month, this multinational firm just penned a $500 million deal with one of the most important education firms in Brazil.
Tonight at 5:00 p.m., I’m telling my Lifetime Income Report  readers all about this play. It’s sure to be a long-time moneymaker for them. After all, this company kicks out a steadily growing dividend to its loyal shareholders twice a year.
To be on the inside of this story, I urge you to check out my most recent report on another unique income opportunity. This one could possibly even save your retirement… regardless of Social Security’s shortfall.
[Independence Note: Unlike scores of other penny stock resources, we’re 100% independent from the companies we talk about in the Sleuth – that means that we never accept compensation in exchange for profiling a company, and our editors never own a position in any stocks they talk about.]
August 10, 2010
Article printed from Penny Sleuth: http://pennysleuth.com
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URLs in this post:
 NASDAQ: APOL: http://www.google.com/finance?q=NASDAQ%3AAPOL
 NASDAQ: COCO: http://www.google.com/finance?q=NASDAQ%3ACOCO
 Lifetime Income Report: http://agorafinancial.com/reports/LIR/PlanB/LIR_PlanB_020310_4989.php?code=WLIRL200
 Click here to learn more about my strategy…: http://lifetimeincomereport.agorafinancial.com/
 Jim Nelson: http://pennysleuth.com/author/jimnelson/
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