Long time readers will know that Grand Canyon Education (LOPE) has been a core holding of my $100M fund for the last five years. Grand Canyon operates a beautiful 300-acre college campus ten miles north of downtown Phoenix. The school will enroll 17,000 ‘ground students’ next fall. It also has over 60,000 online students, most of whom are adult learners (over 21 years old) seeking to restart their undergraduate studies or pursuing certificates and master’s degrees in their chosen professions.
I first wrote about Grand Canyon nearly three years ago, just before I gave a presentation on it at the 2014 Ira Sohn Conference in San Francisco. LOPE was trading for around $43 a share at the time. I continued to write about Grand Canyon over the next two years, praising its impressive growth, smart management, and the quality education it provided. And yet, despite doubling its EPS and beating analysts’ estimates over a dozen quarters in a row, the stock barely budged. At the time of my last piece on the company, in April of 2016, LOPE was trading for … around $43 a share.
The main reason for LOPE’s persistently flat performance was that it was a very good stock in a very lousy neighborhood. The negative sentiment around the for-profit education industry—which is well-deserved for nearly every company in it, with the exception of Grand Canyon—kept investors from buying into what was one of the most impressive businesses I have ever come across in my three decades of money management.
It took until last fall for the markets to finally recognize Grand Canyon’s excellence. LOPE hit $80 last week, up roughly 100 percent over the last year and nearly 300 percent since my fund first entered the position. Nonetheless, I believe Grand Canyon remains one the best growth companies in America today.