Corinthian Colleges, Inc. (NASDAQ:COCO)

Jobs?

Laggard in a slimy sector....

Accreditation scares, lawsuits, and a close shave with the "90/10" federal financial aid rule are enough to make me confident that COCO is going to fail. Abysmal graduation rates (~30%) will also hurt this company in the long run.

Financial aid is the next bubble that's going to burst. With student debt approaching $1 trillion -- more than even credit card debt! -- it's going to be a huge implosion and schools that rely upon such receipts will be in trouble.

For-profit education is already under assault from the Obama administration and the bursting financial aid bubble can only send the stock lower.

http://www.fool.com/investing/general/2011/11/18/this-industry-has-a-failing-report-card.aspx

http://bit.ly/g76pUZ

I think we had all the bad news. and the deal with adecco is a good thing

With the economy shaking again, online education will rise.

Regulatory clouds will clear. Government cannot afford to be implementing regulations that hurt business at this time in our economy.

The whole industry took a beating at the threat of increased government regulation of for-profit medical schools. Bipartisan control of Congress has ensured that such legislation will not be produced, and that actions taken by the DOE will not be significant. Also, the Company just hired (read, bribed) a former DOE regulator to work for the company (read, stall or stifle government infringement).

Oversold here

- selling at 40% discount to book value, trailing PE of 2.9 !!!!
- solid history of earnings and revenue growth
- should withstand changes brought about by government crackdown on for-profit institutions with maybe 25% hit to profitability and then revert to more normal PE.

NB. Found using Valueline service

Background: For-profit schools were doing a bit of predatory recruiting of students and approving students for money when they had no chance in paying it back etc. So now they are under the regulatory interrogation light by the government. Hence a stock dive worthy of the Italian national football team.

I think that regulation will help an industry like this and that they are in a good position to make money off of providing a service that tons of recently unemployed (or English Lit/Theology grads like me!) need in order to like, find jobs. Value play (the only kind!)

Check out http://batting450.wordpress.com/2010/12/12/caps-pick-corinthian-colleges-coco/ and look for me to do some due diligence on their numbers (ie: the legwork) later.

I said this summer, "I expect this one to be chopped into little pieces and sold off in a garage sale", and I still expect that to be the case eventually.
Too many players in this sector, one needs to go.

Short interest: 32% of float

COCO is an enormous, successful, profitable, educational organization that is facing some regulatory problems that could reduce it's profit margins but it has been devalued as though it were going out of business.

With only a few exceptions, the for-profit education sector is doomed, especially those which are heavily dependent on online revenue. Ultimately their doom won't be attributable to government intervention; that might just speed up the inevitable. The problem is competition from traditional universities, which are increasingly running for-profit ventures, as I've seen firsthand in the education industry. Competition from real universities is something most investors don't understand: most of these traditional schools are now offering online and continuing education courses, often in remote parts of the globe, that use precisely the same business models that outfits like Phoenix are using. Universities finance their traditional programs out of these for-profit enterprises. These schools have a huge leg up on the for-profit colleges: (a) zero taxes on endowment gains; (b) a reputable name/accreditation; (c) government support in the form of subsidies, grants, etc. Meanwhile, the for-profit schools only have tons of research showing that for-profit schools are the equivalent of quicksand for students. The only thing that the for-profit schools have going for them is the insistence that the free market can do everything more efficiently -- to which one can only reply: the traditional colleges have already figured that one out for themselves, and are heavily invested in for-profit strategies already.

With a 2.5 PE and a 30% growth rate, this is another Tata which went from 3 to 29. It will get bought out but is a 15-20 stock easily.

Very undervalued, has huge potential.