Zoom Video Communications Inc. (Nasdaq: ZM) is the poster child of stocks that soared due to the COVID-19-fueled lockdown:
ZM Has Skyrocketed in 2020
(Source: Bloomberg)
The stock has risen more than 250% since the start of the year.
But videoconferencing isn’t the only industry that’s benefited from working (and doing everything else) at home.
There’s a private company that has benefited, too.
But since it’s not public, there’s only one way to get access to it.
Read on to find out how…
This Company’s Virus-Fueled Growth Means Profits for You
Online education has blown up. And Coursera is one of the leaders in the space.
CNBC ranked it fourth in its 2020 Disruptor 50 list. (It’s improving. It was No. 19 last year.)
These are private companies that will emerge from the pandemic with tech platforms that have the power to dominate an entire industry.
Founded in 2012 by two professors from Stanford, Coursera has 48 million users. The company offers more than 3,000 online courses, as well as degrees from top schools at a fraction of the on-campus cost.
And more than 2,000 firms use Coursera for Business to help train workers.
As a result of the virus, Coursera has provided expanded access to its content to schools and to state governments. The latter will provide training to the unemployed.
In its latest round of funding last year, Coursera was worth $1.6 billion. I believe it’s worth more today.
The problem is … you can’t buy shares unless you’re a high-powered venture capitalist.
This Vehicle Will Get You in the Room
We have to think outside the box.
If you can’t invest directly in shares of Coursera, the next best thing is to buy shares of Sutter Rock Capital Corp. (Nasdaq: SSSS).
Sutter Rock owns a portfolio of venture investments. “Venture” means its holdings aren’t public yet, so it can buy them more cheaply.
And Coursera is its largest holding, making up nearly 22% of the total.
The mind-boggling part is you can buy Coursera today at a discount. You see, Sutter Rock shares are trading for less than the value of its assets.
As of March 31, its net asset value was $10.22 per share. Shares closed at $5.86 that day. That’s a whopping 43% discount to book value.
And the real discount is even greater. You see, March 31 was just one week after the stock market bottomed. Sutter Rock and its investments had fallen a lot.
Today, those assets are worth more. That means Sutter Rock is worth more than $10.22 per share.
If its shares returned just to their value at the end of last year, the net asset value would be $11.85 per share.
The Market Is Buying In
It took a while, but the market is catching on. Shares have moved up recently:
SSSS Is Surging in June
(Source: Bloomberg)
But based on its June 17 closing price, SSSS is still trading at a 37% discount to my calculated value.
Please note, shares could fall a bit more after their big run-up.
In a world of stratospheric valuations, though, Sutter Rock is a well-priced way to buy the growth of online education.
In addition to Coursera, it also owns a stake in another well-known provider: Course Hero. And as of the end of the first quarter, education technology made up nearly 45% of its portfolio.
I expect the company will confirm the growth in value by no later than its early-August earnings date.
Some kids may go back to campus in the fall, but the future of the growth of education is now firmly online. Don’t miss out!
Good investing,
Editor, Profit Line
