American Public University: A new way of learning

Days before Americans celebrated Independence Day last week, President George Bush signed into law a new war spending bill, unofficially dubbed the New G.I. Bill. This legislation doubles the amount of funding allocated for the education of military veterans and covers the cost of a four-year public college for all who have served at least four years since Sept. 11, 2001.

Shares of American Public Education Inc. (Nasdaq:APEI) had been rising in anticipation of the signing, and then jumped in response to the news. The company is one of a handful of for-profit businesses providing online higher education to members of the military, and was widely seen as the biggest beneficiary of this spending increase.

Charles Town, W. Va.-based American Public Education’s stock closed Tuesday at $40.11 per share, up from $36.44 at the start of June, refreshing proof that it is, in fact, possible to side-step the bear market.

Although the increased spending on veteran’s education is a major bonus for American Public University’s shares, the company had already been on a rapid growth path, more than doubling its revenues in two years. Its 2007 revenues totaled $69.1 million, up from $40.1 million in 2006 and $28.2 million in 2005. Net income over that same period rose to $8.8 million in 2007, from $1.8 million in 2006 and from a loss of $11.9 million in 2005.

“Out of all the education stocks we follow, American Public University has the strongest growth prospects,” said Jeff Lee, an analyst with Signal Hill, which projects earnings will grow at a rate of 35% to 40% for the next several years.

Eight analysts who follow this company are on average forecasting net income will grow to $0.72 per share in 2008 and $1.06 per share in 2009, from $0.64 per share last year. They see revenues increasing to $104.6 million this year and . . .

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