For-profit College Under Attack - Devry Inc

The US based for-profit colleges have been under attack by both the investors and the government due to questionable student recruiting practices and low graduation rate.  The U.S. Government Accountability Office(GAO) reported on August 4, 2010 that the undercover testing at 15 for-profit colleges found that 4 of the colleges encouraged fraudulent practices and all 15 made deceptive or questionable statements.  The continues governemnt probes into the for-profit colleges scared away the investors and drove down share prices of the entire group.  However this may be exactly the right time to invest in these stocks as the wise investors alway do.  Yesterday we looked at Apollo Group who is the leader among the for-profit colleges.  Today lets look at another one of the major players in this group.

DeVry Inc(NYSE:DV) is the parent company of several education institutes including DeVry University, Ross University, Carrington College, Chamberlain College of Nursing and Western Career College  with DeVry University being the largest with more than 80,000 students per year.  DeVry's annual revenues have been on steady climb from $933 million in 2007 to 1.9 billion in 2010, more than doubled in 3 years.  Its annual income even better and almost quadrippled from $76 million in 2007 to $280 million in 2010.  Even the most recent quarterly report saw no sign of pulling back with 20% revenue and 35% net income increase compared to the same quarter of previous year.

Shares of Devry (NYSE:DV) have not been doing well this year.  The stock went from $56 in January of 2010 to $48 at the end of the same year losing 14% while all major indices were up in double digits for the same period.  The stock is currently trading at P/E ratio of 11.62 with market cap of $3.37 billion. The technical chart actually shows potential upside as the 20 day moving average has just crossed on top over 50 day moving average with KD line now sitting at 80, an indication of bullish trend.  As the year of 2011 begins with optimism this may be the time that the smart investors jump back to DV.