For-profit College Under Attack - Corinthian Colleges (Nasdaq:COCO)

Shares of most US based for-profit colleges have been suffering for the past 52 weeks due to government probe of 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.  So far we've already looked at Apollo Group and DeVry who are the leaders among the for-profit colleges.  Today lets look at another major player in this group.

Corinthian Colleges (Nasdaq:COCO) is the operator of 89 schools across 24 states and 17 schools in Canada with enrollment of 86,088 students .  Corinthian College's annual revenues have been rising rapidly for four straight years from $919 million in 2007 to 1.76 billion in 2010, gaining 92% in 3 years.  Its annual income grew even more from $7 million in 2007 to $146 million in 2010 resulting in a monstrous 1900% surge in 3 years.  And despite the recent government probe the company still reported a strong quarterly earning with a record $501 million in quarterly revenue and $33 million net income.  

Shares of Corinthian College have been miserable for the year losing 62% of its value since January 2010.  The stock is now traded at the level back in 2000 with a ridiculously low P/E ratio of 3.09 at market cap of 430 million.  Normally at such low P/E ratio you would expect crazy buying yet due to uncertainty of the probe most investors kept staying on the sideline.  The technical chart indicates a strong bullish signal with 20 day moving average just crossed on top of 50 day moving average to form a Golden Cross.  KD lines also show positive signal as both lines are rising.  This is definitely a stock overlooked by most investors and should be doing really well for the year.  The company's financial remains strong and $5 per share is definitely a huge discount.