5 Best Stocks For Day Trading

2. New Oriental Education & Technology Group Inc. (NYSE:EDU)

Number of Hedge Fund Holders: 39   

52-Week Range: $1.68-$19.97

A Chinese crackdown against dual-listed firms has hurt nearly all Chinese stocks trading in the United States. But New Oriental Education & Technology Group Inc. (NYSE:EDU) has suffered because of new regulation in China that bans for-profit tutoring. As a result, the company has shifted the main business to non-core subjects to circumvent the ban. A housekeeping services firm has also been set up to help with the revenue flow. 

However, investment advisory Morgan Stanley recently upgraded New Oriental Education & Technology Group Inc. (NYSE:EDU) stock to Overweight from Equal Weight, noting that the overseas businesses of the firm and expansion into new areas would bear fruit in the long-term.

At the end of the second quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $590 million in New Oriental Education & Technology Group Inc. (NYSE:EDU), down from 45 in the preceding quarter worth $2 billion. 

In its Q1 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and New Oriental Education & Technology Group Inc. (NYSE:EDU) was one of them. Here is what the fund said:

“New Oriental Education shares declined in the quarter, seemingly on account of two notable drivers. First, Chinese online education is currently under a regulatory microscope, although the online tutoring area is not central to New Oriental’s business. We continue to believe that, as a large player in a highly fragmented market, New Oriental is well-positioned to manage regulatory change and offers regulators an easier touchpoint to regulate and monitor than individual mom & pop operators.

As regulatory fears hit the after-school tutoring market, we think New Oriental, a leading player in brick-and-mortar after-school tutoring, could gain strength. We think the long-term backdrop for after-school tutoring remains quite favorable. Significant scale advantages and a highly cash generative model with just approximately 5% market share indicate that New Oriental has potential to grow at a high rate, in our opinion. Further, movements by another investor in New Oriental in late March 2021 prompted indiscriminate selling of shares. Those sales left shares trading at a compelling valuation, in our opinion, so we acted by adding to our position. We think New Oriental remains poised to grow earnings at approximately 25% annual rate in the coming years.”