Apollo Shares Take Hit on SEC Probe

October 28, 2009

Shares of Apollo Group (APOL) are down sharply today on news that the government has opened an investigation of the company's accounting. Let me stress that this isn't a criminal investigation; it's an informal probe by the SEC to look at how Apollo recognizes its revenue. Bear in mind that as a for-profit school, almost all of Apollo's revenue comes as student aid from the federal government.

Let's remember the key fact that Apollo's business continues to be strong. The company said it earned $1.06 a share for its fiscal fourth quarter which was two cents better than expectations. Revenue rose nearly 30% to $1.08 billion which was also better than Wall Street's forecast. The stock is a very good buy.

Speaking of the education sector, in this week's Stock of the Week, I took a closer look at two education stocks–Strayer Education (STRA) and Corinthian Colleges (COCO). With the jobs market in such dire shape, many education companies have seen their businesses thrive.

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