5 Best Education Stocks To Buy In 2023

4. TAL Education Group (NYSE:TAL)

Number of Hedge Fund Holders: 28

TAL Education Group (NYSE:TAL) specializes in after-school tutoring services for K-12 education in China. The company provides a range of academic tutoring services to K-12 pupils, encompassing subjects such as mathematics, physics, chemistry, biology, history, geography, political science, English, and Chinese. It is one of the premier education stocks to invest in. 

In late December, Linda Huang, an analyst at Macquarie, observed that the Chinese Ministry of Education and twelve other departments have jointly issued new guidelines for the non-academic tutoring industry, which include more stringent and detailed requirements for course fees, tutor qualifications, teaching time, and inspection of operations. These guidelines were issued in addition to the guidelines for non-academic tutoring institutions that were issued in March 2022. Huang noted that the after-school tutoring companies she covered complied with these rules, but she acknowledged that the market sentiment may be affected in the short term, leading to profit-taking pressures since these companies’ share prices surged more than 50% in the past two months. Despite this, Huang maintained an Outperform rating on TAL Education Group (NYSE:TAL) and suggested that investors reconsider after the market correction, given that the company is compliant with government regulations and has the potential to consolidate the market.

According to Insider Monkey’s fourth quarter database, 28 hedge funds were bullish on TAL Education Group (NYSE:TAL), compared to 20 funds in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the largest stakeholder of the company, with 4.4 million shares worth over $31 million. 

Here is what Tao Value has to say about TAL Education Group (NYSE:TAL) in its Q4 2021 investor letter:

“Looking at the value destruction, TAL Education (TAL) is one of the most painful losses. Although the company is part of the “Mindful Compounder” bucket, it impaired by 95%. If anything, it is a heavy price paid for learning that stock returns are driven by more than business and market factors, but also societal factors. I personally think having 4 out of the 5 top value destructions being recently started positions in Chinese stocks is a bit biased, as the market may have overreacted the most to anything China-related recently.”