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Released: October 30, 2011

Is DeVry a good short-term trade?

Q: Do you think DeVry is a good stock to buy and do you feel it will rise for a short-term trade?

A: DeVry (DV) is giving investors an education in the risk of the stock market.

The company is a large player in the for-profit education industry. For years, especially during the 1990s, for-profit education stocks were giant leaders. These companies were beneficiaries of lenient lending practices from the U.S. government. Students could pay the for-profit schools their tuition fees largely using federal loans.

But over the past few years, the easy loans to students skidded. Regulators have become very concerned about the hefty debt loads many of these students face upon graduation, relative to the salaries they receive. The entire industry has been under pressure as a result. Shares of DeVry have fallen from more than $65 a share in July to roughly $39 a share now.

DeVry, along with most of the industry, is attempting to win back investors by showing its students can succeed. And so far, DeVry is navigating the disruptions to the industry. Revenue in the fourth fiscal quarter that ended on June 30 was up 7.9%, while net income rose 5.1%. While that may not be the stratospheric growth of the past, it’s still growth amid a tough time for the industry.

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