Stock of the Week Under $10: Lincoln Educational Services (LINC)

If you’ve recently had to hire an electrician, or have your HVAC (heating, ventilation and air conditioning) system replaced or serviced, you may have asked yourself if you went into the wrong profession. Demand for these professionals is high, and the commensurate rates they can now charge, leads me to my (barely) under $10 stock this week, Lincoln Educational Services (LINC).

Lincoln Educational Services provides career oriented post-secondary education to high school students and working adults. This includes technical training in automotive repair, HVAC accreditation, the nursing (LPN)  and dental assistant professions, and even the culinary arts. 

The company recently signed a partnership agreement with Tesla (TSLA) to provide EV automotive repair training. And, is opening new and expanded campuses in Pennsylvania and Tennessee to broaden their HVAC technical training offerings. 

With the cost of traditional college rising even before the recent spate of inflation, and continuing to rise with it, technical training makes economic sense for a broadening demographic, and is a much safer path to a career that is both in high demand and comes with very good pay. 

In their earnings announcement this week, Lincoln focused on the fact they are seeing higher retention rates due to their new “Lincoln 10.0” hybrid instructional platform. The new platform, which incorporates AI into several aspects of its functions, gives Lincoln the ability to augment in person offerings with remote learning aspects that students desire. 

Commenting on the quarter, President and CEO Scott Shaw, said, “Lincoln continued to generate strong results during the third quarter as we achieved 10.5% revenue growth and 7.1% student start growth.” The company has over $70 million in cash and short term investments, with no debt, a key business advantage in the current interest rate environment. 

LINC trades at just over 10x earnings and only 0.4x sales, and a little over 1.2x book value. The company has gross margins of over 57%. In last quarter’s earnings release, Lincoln also raised its full year outlook for revenue, new student starts and adjusted net income. 

Lincoln rates a B overall in our POWR Ratings, with a rating that is higher than almost 80% of the companies we track. It has an especially high rating in the Sentiment component where it rates an incredible 99.57. This isn’t surprising given the strong secular trend the company finds itself in. 

A combination of strong demand for its services, and a value proposition that puts its graduates on a sound financial footing should continue to drive earnings at Lincoln Educational Services. This under $10 stock may not remain that way for very long. 

What To Do Next?

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LINC shares were trading at $9.12 per share on Thursday afternoon, up $0.01 (+0.11%). Year-to-date, LINC has declined -9.16%, versus a 0.05% rise in the benchmark S&P 500 index during the same period.

Jay is a former professional market maker who cut his teeth trading on the floor of the CBOE. With more than 20 years of experience trading and investing, his focus is on making professional strategies accessible to everyone, which is exactly what does in his highly profitable POWR Income and POWR Stocks Under $10 investment advisory services.

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