Investors in ASX shares may not often think of education and human resources as sectors to plough their money into.
But there are few other areas that have more stable demand and are important to the economy than the development of human capital.
Helpfully, in a video last week some Wilson Asset Management analysts named three ASX shares to buy in the education and human resources industry:
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Could there be buybacks for shareholders of this business?
For Wilson senior equity analyst Shaun Weick, childcare provider Evolve Education Group Ltd (ASX: EVO) makes a compelling investment case right now.
"Evolve's a standout buy for us," he said.
"They've just divested their New Zealand assets for $50 million. You're essentially left with an Australian trading business which is performing well."
Weick pointed out that the Evolve shares are currently trading around 2 to 2.5 times enterprise value to earnings, compared to more than five for its peers.
"The balance sheet, therefore, provides immediate flexibility around capital returns. We think buybacks are possible — and acquisitions over time," he said.
"That's a strong buy for us."
Analyst coverage is sparse for Evolve Education. According to CMC Markets, at least Canaccord Genuity agrees with Weick, rating the stock as a strong buy.
'Non-fundamental factors weighing on the share price'
Despite the world opening up after the COVID-19 pandemic, shares for international education service provider IDP Education Ltd (ASX: IEL) have fallen 24.6% year to date.
"We think there are non-fundamental factors weighing on the share price at the moment, with the release of escrow arrangements and the departure of well-regarded CEO Andrew Barkla."
Weick thus feels like the stock will head up as business performance once again becomes the major factor in investor decisions.
"If you look at the policy settings globally, they're the most supportive they've been, in terms of migration for students into IDP's key destination markets," he said.
"You couple that with the investment they've made in their digital strategy, we think they're well-placed to take significant market share and generate very strong earnings growth."
Earlier in the week, Medallion Financial private client advisor Jean-Claude Perrottet praised IDP's reporting season update.
"Margins improved by 24.8%, the highest in the company's history. Revenue grew by 50% on the prior corresponding period, in response to a 45% increase in student placements and a 67% increase in international English language tests."
Growing both organically and via acquisitions
Fellow senior equity analyst Sam Koch likes workforce management provider PeopleIn Ltd (ASX: PPE).
"PeopleIn has been growing organically at about a 10% clip, and they supplement their organic growth through acquisitions."
The business has been hamstrung during the pandemic years, he added, with border closures prohibiting access to the migrant workforce their customers normally utilise.
As international movements are liberalised, according to Koch, PeopleIn's organic growth will accelerate.
The shares have fallen more than 31.7% so far in 2022, putting it into bargain territory.
"You're trading at a sub-10 times price-to-earnings multiple with strong earnings growth," said Koch.
"With an undergeared balance sheet, we believe there'll be plenty of catalysts to see this company rerate."
