Publishing Stocks: Will Apple Lead the Textbook Digital Revolution?
Apple (NAS: AAPL) is planning a big announcement on Thursday in New York City, and many suspect it will address the company's plans to revolutionize the textbook industry.
Textbooks, from third-grade social studies to college level chemistry courses, are about due for a tune-up. Apple may be planning to take the lead on that front by selling textbooks through its iBooks store, directly from textbook publishers like McGraw-Hill (NYS: MHP) .
CNBC contributor Natali Morris adds, "Apple could also be aiming to integrate those book sales with course material currently offered on iTunes U, Apple's education portal which allows schools and universities to distribute lesson plans, lab films, and audiobooks through Apple's free software."
Interestingly, "In Steve Jobs' recently published biography, author Walter Isaacson writes that the textbook industry was one Jobs desperately wanted to change." He envisioned "books" with interactive elements like educational videos embedded on the "pages" and clickable texts.
What about Amazon's Kindle or Barnes & Noble's Nook? Apparently they are limiting to student's needs for "annotation, note taking, highlighting, quick cross referencing, etc."
If the iBook store gains momentum, it could take some business away from Amazon's online bookstore, which is No. 1 in the U.S. "This could equate to big bucks when you consider how expensive textbooks are in comparison to pop novels." Apple also takes a larger (30%) cut of all products sold through the iBook store -- a very nice commission when one considers the price of textbooks.
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If speculation over Apple's upcoming announcement is true, do you think the textbook industry has much to gain, or lose, from the trend?
To follow the trend of the textbook industry, we identified the six largest book publishers trading on the U.S. stock exchange. How do you think Apple's plan will affect their futures? (Click here to access free, interactive tools to analyze these ideas.)
1. Courier (NAS: CRRC) : Engages in printing, publishing, and selling books. Market cap of $143.95M. 0Offers a good dividend, and appears to have good liquidity to back it up -- dividend yield at 7.14%, current ratio at 2.6, and quick ratio at 1.35. The stock has had a good month, gaining 11.88%.
2. John Wiley & Sons: Publishing Industry. Market cap of $2.63B. 0The stock has lost 12.% over the last year.
3. The McGraw-Hill Companies: Provides various information services for financial, educational, and business information markets worldwide. Market cap of $13.32B. The stock has gained 1.52% over the last year.
4. Pearson (NYS: PSO) : Engages in education, business information, and consumer publishing businesses worldwide. Market cap of $15.65B. 0Relatively low correlation to the market (beta = 0.78), which may be appealing to risk averse investors. Offers a good dividend, and appears to have good liquidity to back it up -- dividend yield at 3.34%, current ratio at 1.73, and quick ratio at 1.44. The stock has gained 2.68% over the last year.
5. Scholastic (NAS: SCHL) : Operates as a children's publishing, education, and media company primarily in the United States. Market cap of $901.38M. The stock is a short squeeze candidate, with a short float at 10.26% (equivalent to 14.48 days of average volume). The stock has had a good month, gaining 13.05%.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
List compiled by Eben Esterhuizen, CFA. Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Author owns shares of AMZN. Data sourced from Finviz.
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