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Why Vocation Ltd’s shares climbed 8% today

Training and education provider Vocation Ltd (ASX: VET) saw its shares soar more than 8% today, after the company announced it was buying Real Institute, a national education and training provider.

As you can probably see, Real Institute already provides similar services to Vocation, but adds additional scale, geographic and industrial diversification. What Vocation really wants though is the exposure to new sources of revenue and Real Institute’s enterprise clients.

According to the press release, Real’s online learning channel is regarded as one of the best in Australia, and the company has won numerous awards for education and training. More than 25,000 students have been trained by Real since it was founded in 2007, and 10,000 students alone enrolled last year.

Vocation will pay $54 million for Real Institute, funded from a combination of cash and shares. $40 million in cash and $7 million worth of Vocation shares will be paid initially, with a further $7 million share payment to be paid conditional on achieving Real’s forecast results this year.

Vocation, along with the likes of Navitas Limited (ASX: NVT), Kip McGrath Education Centres Limited (ASX: KME) and Redhill Education Ltd (ASX: RDH) are Australia’s major ASX-listed education and training providers.

All four companies have had a strong year so far, with Kip McGrath doubling its share price, while Vocation has seen gains of 39%, and Navitas and Red Hill have put on 14.4% and 18.8% respectively. Compared to the S&P/ASX 200 Index’s (Index: ^AXJO) (ASX: XJO) miserly 2.4% rise, they are positively steaming ahead.

More gains could be on the cards, as demand for education and training rises and Foolish investors may want to add these stocks to their watchlist. After all, they could be a brilliant way to make $1 million on the sharemarket, as our new report below discusses.


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Motley Fool writer/analyst Mike King owns shares in Kip McGrath Education. You can follow Mike on Twitter @TMFKinga