Questor is The Telegraph’s stock-picking column, helping you decode the markets and offering insights on where to invest.

The learning process doesn’t have to grind to a halt the moment we leave school or college. We are, after all, perfectly capable of digesting facts, figures and concepts – and learning new skills – well into our older age.

Adult education can be a highly rewarding experience for students, but it can also make for a thriving business. Online courses, professional development, vocational training and career-changing studies are all growth areas.

This is notably the case in the US which, despite its troubled system of basic education, has a large number of highly rated private universities. And in America, running academic institutions for profit is applauded, not scorned.

Perdoceo Education owns and operates five universities, including the Colorado Technical University and the University of St Augustine for Health Sciences – with campuses in California, Florida and Texas.

It also runs the American InterContinental University System, which covers two universities with campuses in Georgia, Texas and California, and another based in Arizona that operates entirely online.

Its institutions offer an extremely wide range of courses, ranging from business studies, healthcare and computer science to criminal justice and cybersecurity.

And it has a stated aim of growing through acquisitions as well as organically. Recent deals include Coding Dojo, a privately backed computer training school, and Hippo Education, which specialises in medicine and healthcare.

As a company, Perdoceo Education is highly profitable.

The group’s pre-tax profit margin last year was very healthy at nearly 30pc and its return on invested capital, which measures the profit generated from every dollar invested in the business, was just over 15pc. These returns offer reassurance the company makes its acquisitions pay.

Jeremy Javidi, a senior portfolio manager at Columbia Threadneedle Investments, said he originally bought the shares a little over a year ago because he believed student enrolments would grow thanks to investments in new staff and facilities, which should also help to drive margins higher over time.

He had an eye on the business using growing free cash flows to boost dividends and share buybacks, as well as for takeover deals.

All of this has happened since Javidi first bought the stock in the spring of last year, but he still thinks there’s more to come. Enrolments rose by 8.1pc last year, the operating margin increased by 4.4 percentage points, the dividend was lifted and a new buyback programme was put in place.

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“We continue to own the stock as the company continues to maintain a pristine balance sheet while growing free cash flow,” Javidi said. “This will continue to be returned to us or deployed in investments with a high return on invested capital that leverage the company’s shared services platform [universities pooling resources].”

Furthermore, Javidi said, any deterioration in the US economy – most economists are forecasting it will weaken in the next 12 months – would most likely benefit businesses as workers seek to up their skills to improve their prospects in a tougher jobs market.

Javidi is one of six of the world’s best-performing fund managers who owns Perdoceo Education shares. Each of them rank in the top 3pc by performance among the more than 10,000 managers tracked by financial publisher Citywire.

Perdoceo’s popularity with leading professional investors has seen it awarded a top AAA rating by Citywire Elite Companies, which rates shares based on their level of smart money backing.

The company’s shares, which are listed on Nasdaq, are available through the UK’s main stockbrokers, but potential buyers should be sure to fill in the forms minimising withholding tax and check with their provider for any additional overseas dealing charges.

Even though Perdoceo Education’s shares have risen by more than 80pc over the past two years, their valuation remains undemanding.

The stock trades on a multiple of 13.3 times this year’s forecast earnings and an expected dividend yield of approaching 2pc.

With sales, profits and earnings per share all forecast to move in the right direction, this company – which is debt free and cash positive – looks like a solid buy.

Questor says: buy

Ticker: NASDAQ:PRDO

Share price: $34.74

Miles Costello is a contributing journalist for Citywire Elite Companies.

Read the latest Questor column on telegraph.co.uk every weekday at 5am. Read Questor’s rules of investment before you follow our tips.

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