For Chinese students in their home country as well as the U.S., plenty of people are invested in their virtual and in-person education. That's good for the students, but it's also good for investors seeking to gain capital from exposure to the Chinese education sector.
If you want to invest in this sector, it's important to know the securities that experts are watching.
Laix Inc. brings AI to Chinese education.
Laix Inc. (NYSE:LAIX) delivers AI (artificial intelligence) for education purposes. The stock soared 135.16 percent the first week of February and has since dipped 41.36 percent from its peak. Since the company went public in 2018, the shares have incurred immense volatility. The recent surge in the stock price likely has to do with the rather high float ratio for shorted shares, which global investors have been particularly privy to.
Whether Laix can maintain enough relevance to gain long-term stock value isn't clear.
GSX Techedu is a Chinese virtual education stock to watch (albeit carefully).
The accessibility of virtual education is necessary now and in the future. GSX Techedu (NYSE:GSX) does just that and its earnings for the fourth quarter of 2020 show great potential. With revenue up 413 percent for the year (reaching $133 million), investors responded in droves.
After reaching an all-time peak of $142.70 per share, the stock has fallen off its high horse. However, subsequent earning reports could boost shares up again. All in all, GSX has already gained 440 percent since its 2019 market debut. If the current investigation proves that the company pumped its earnings report, that could all change. Investors will want to be careful until there's an outcome.
Elite Education Group International provides education for Chinese students.
If you're looking for a Chinese education stock that's based domestically, Elite Educate Group International (NASDAQ:EEIQ) is it. The company focuses on study-abroad and post-study services for Chinese students based within the U.S.
Opening on its first full day of trading on March 26 at $17.86 per share, the stock is bound to see some volatility in the near future (as with any newly public company). The 254 percent jump from the IPO price of $4.00 per share as of mid-morning on March 26 will surely shift.
Consider these education groups for more exposure
TAL Education Group (NYSE:TAL) is a Beijing-based holding company with an eye for after-school education. The stock grew rapidly in the past year but has since dipped down in the red for the 12-month trailing returns.
So far, China Online Education Group (NYSE:COE) has been even more volatile in the past year. Its long-term potential is questionable.
New Oriental Education & Technology Group Inc. (NYSE:EDU) looks more promising, especially during the current bear market for the sector. Even amid the drop, New Oriental has managed to maintain a positive return (if only by a hair).
Of these three, New Oriental will likely be the strongest buy. GSX Techedu would theoretically be another one to watch if it weren't for the rumored investigation. Whatever the security, the fact that all of these education companies headquartered in China are dual-listed on U.S. exchanges makes the investment much easier for Americans looking to add the sector to their portfolio.