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According to Bloomberg, profit
forecasts have shrunk across the board
for every industry. There are now more
than 3,500 companies whose 2009 EPS
estimates are lower today than they were
90 days ago. But which of these
companies is actually raising its
earnings estimates from $3.49 per share
in 2009 to $3.80, with some of the more
optimistic projections even calling for
$4.00?
A.) Apollo Group (APOL)
B.) General Motors (GM)
C.) Home Depot (HD)
D.) Philip Morris (PM)
E.) Starwood Hotels (HOT) |
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Published:
February 11, 2009
The
correct answer is 
(A.) Apollo Group (APOL)
Shares of APOL have been marching
steadily higher -- setting record
highs, in fact -- and it's easy to
see why.
Historically, the company's flagship
University of Phoenix (which has
campuses around the country and
online classes worldwide) was geared
primarily toward working adults.
Education is a highly scalable
business, and spreading a largely
fixed cost structure among tens of
thousands of new students each
quarter is driving powerful growth
in earnings and cash flows. Thanks
in part to a national branding
campaign and the counter-cyclical
nature of education, APOL's student
population has swelled to 385,000 --
an impressive increase of 60,000
(+18.4%) over this point last year.
In fact, Apollo has brought in more
new students over the past 12 months
than rivals ITT (NYSE: ESI) and
DeVry (NYSE: DV) have in total.
The influx (and an improving
retention rate) helped revenues jump
+24% last quarter to $971 million.
Earnings for the period climbed +35%
to $1.12 per share, surprising
analysts who were expecting less
than $1.00 per share. Now, the group
is targeting earnings of $3.80, and
the more optimistic projections are
calling for nearly $4.00. Even the
most pessimistic forecast of $3.55
per share still represents healthy
bottom-line growth of +25% for the
year.
Overall, Apollo is a dominant player
in an attractive and growing
industry, and one of the few
companies with high hopes for a
record year in 2009. But it's not
the only fat fish in the sea. By
using StreetAuthority's advanced
screening software, editor Nathan
Slaughter has found a few standouts.
In his latest issue of the
Half-Priced Stocks
newsletter, Nathan lists 10 other
companies whose profit outlooks have
been raised, not lowered. Better
still, these firms were already
expected to deliver healthy
double-digit earnings growth for the
year. As a group, they have
rebounded nearly +90% off their
lows, but all are still trading
below fair value. It's a list that
every investor ought to see. To
learn the names of these stocks, and
to learn more about Half-Priced
Stocks,
please visit this link.
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