I want to try a quick relaxation exercise.
This might sound crackpot, but just bear with me for a second.
Let's all take a deep breath, conservatives and liberals alike, and admit, out loud, the one thing that is true, regardless of where you land on the political spectrum.
Say it with me...
The U.S. education system is screwed up beyond what any of us would have thought was possible.
Looking at the results of the Program for International Student Assessment (PISA) tests, we score in the middle of most educational-achievement levels. We once had the best educational system in the world. Now, we're the Oakland Athletics of the global education system - a once-mighty enterprise now lucky to just be mediocre.
The problem has never been a lack of money...
The United States, on average, spends about 30% more per child than the average developed nation. Only Norway, Switzerland, and Austria spend more per kid that we do.
It just seems that the more we spend, the worse it gets. We've been trying to money-whip the education system into line for decades now, and if anything, we're only seeing an inverse relationship grow between money and results.
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But the opposite is true of the education system's fastest-growing area - one that I've been watching like a hawk lately.
In fact, I just found one company in this particular area that's a strong "Buy" right now - and it's set to keep profiting from the fact that the U.S. public school system is, quite frankly, a giant mess...
Public Education Is a Joke, and Our Kids and Teachers Are the Punchline
For years, I helped broker a lot of municipal-bond deals, and that required digging through hundreds of school district bond-offering prospectuses.
Yes, these are often just as boring as they sound. But I highly recommend parsing through your local school board budget every now and then if you really want to get an idea of just how staggeringly wasteful our country's education system has become.
The amount of money poured in at the top and the amount that comes out the bottom in the actual classroom sums up the problem perfectly. Millions in cash are sucked out by an overweight and hyper-productive bureaucracy, and our kids pay the price.
Another part of the problem - and honestly, the most unbelievably infuriating - is the fact that we pay our teachers like serfs.
I saw how the public education system exploits teachers when my daughter was top of her class, won several awards while studying to be a teacher, and received high marks for her teacher-training systems. She worked her ass off for years, and the best offer she received as a first-year teacher was an annual salary less than $30,000.
At the same time, there were hundreds of administrators in the system making over $100,000 annually just to sit in their offices soaking up the benefits of a broken bureaucracy.
We can go on and on about the causes of the problem: the teachers unions' stranglehold on curriculum, standardized-testing issues, and a lack of parental participation, among many, many others. Each is more exasperating than the last.
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But the point I want to make is that I truly believe these are problems we can all agree on. My right-wing buddies can find as much to hate in the modern educational system as my liberal wingnut friends can.
Universally, our schools are letting our kids down, and more parents are making the decision to homeschool their kids.
Homeschooling has become the answer to the public education system's failings, and it's already showing up in the numbers. The National Center for Education Statistics reported the number of homeschooled kids in the United States grew from 850,000 to 1.8 million between 1999 and 2012. Since then, the number has easily surpassed 2 million.
Make no mistake: there's a lot of money to be made from homeschooling's growing popularity.
And those of us willing to sit toward the front of the classroom can position ourselves to make a killing from this trend.
It all starts with one company that sells a type of homeschooling education software used by nearly half of all high school students in the United States...
Here's How We'll Make Money from the Advent of Homeschooling
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I'm talking about K12 Inc. (NYSE: LRN), a software company that offers online courses and tools for parents who choose to homeschool their kids.
The firm partners with school systems all over the United States to provide online learning options for kids who prefer learning at home or may not be able to attend classes physically.
K12 runs the virtual-school offering in my local school system down here in Florida. My family used it for some course options and was delighted with the ease of use and effective curriculum. We have some friends who use it, and they also praised the quality of the products.
Essentially, parents like it because they have more control over what their kids are taught, which is something of a luxury in today's ever-changing and dysfunctional public school system.
This sense of control has quickly ballooned into a massive market.
In fact, about 5 million students took an online course during the 2015-2016 school year, and around 275,000 kids enrolled exclusively in online- or virtual-education programs. Close to 50% of high school kids have used online resources or taken advanced courses not available at their schools.
This growth makes sense if you think about it. Just picture the range of problems that can be solved with online learning.
If your children are at the mercy of a bad public school system in a cash-deprived area, many states offer virtual programs that can give them the education they deserve.
If you're a military parent always on the move and your child is tired of perpetually being the "new kid," virtual school is the answer. In fact, K12 has unique programs specifically tailored to military families.
Parents can even use K12 offerings to attack weak points in their child's skillset. If they struggle with the math or foreign language courses, K12's online programs can guide them through the tough spots.
It's truly an enormous opportunity, and LRN shares allow us to jump on the bandwagon for a reasonable price.
The stock trades at about 6.5 times operating cash flows produced by the business, and just 1.4 times its net asset value. The company boasts an asset-light business model, with most of the assets being cash and receivables.
In other words, you're not paying much for the actual business or the enormous potential for future profits.
With that sort of growth potential, it's no surprise the stock has a Money Morning VQScore™ of 4 - our top score - making it one of the best buys on the market right now.
Best of all, insiders own more than 9% of the outstanding shares. This is always a good thing, and it's always something I look for since the executives need to make the shareholders rich so they can also get rich in the process.
The bleak state of American schools is certainly upsetting, but that doesn't mean we should just sit by and lament. We can still make the most of a crappy situation, and investing in the virtual-education revolution is the best way to do that.
But that's not the only path to life-changing wealth...
You Could Grow Incredibly Wealthy Using This Secret - Even When the Markets Are Going Down
This method only focuses on stocks that have a strong potential to skyrocket. When a stock rises past a certain threshold (ideally over 100%) you collect the money, then roll it into a new position over and over again. It's that simple - and it could make you millions. Learn more here...
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About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of Peak Yield Investor.