In real estate, it's all about "location, location, location." In today's stock market, a surprising place to invest may be "education, education, education."

It's no secret that the latest economic numbers paint a dreary picture for the economy going forward. And now it's official: We’re in a recession. Goldman Sachs estimates that unemployment will reach 9% after all is said and done.

As the credit-market crash that has derailed financials from Fannie Mae to Citigroup (NYSE:C) spreads to the real economy, every company, it seems, from Exxon Mobil to Garmin (NASDAQ:GRMN) is getting hammered.

Here's a defensive sector you may not have considered: education. As unemployment rises, many adults turn to post-secondary degrees to bolster their skills and become more competitive in a soft job market. As a result, companies that offer online and traditional classes or undergraduate and graduate degree programs should prevail during this economic tumult.

Need proof? Enrollment, the best measure of education companies' organic growth, is on the rise, and so are revenue and profits.

To take advantage of this situation, I searched for education companies rated with three stars or better using the Motley Fool CAPS center and found some strong companies.

Take a look at ITT Education (NYSE:ESI). The company offers post-secondary degree programs focused on technology, and business is booming. ITT, which is opening new branches, saw enrollment increase 19% in the third quarter. Revenue climbed 32% while earnings from continuing operations moved up 21%.

Furthermore, despite the current recession, the company is powering forward. It just raised its full-year EPS forecast to $4.90-$5.00 from $4.65-$4.75, as more people are expected to pursue a post-secondary education to improve their credentials. After talking with lenders, management said that they don't perceive students will face further difficulty obtaining private loans.

Apollo Group (NASDAQ:APOL), provider of programs at high school, college, and graduate levels and operator of the University of Phoenix, among others, is showing double-digit enrollment, revenue, and earnings growth. The company grew revenue by 15% in fiscal year 2008 and net income, excluding one-time items, by 9.6%. Plus, the stock is up 5.6% year to date -- impressive in this environment.

Here are more names in the education space that have been rated by our Motley Fool CAPS investor community:


Market Cap (in billions)

Expected Revenue Growth, Current Year

Expected EPS Growth, Current Year

Net Margin (TTM)

CAPS Rating (out of 5)

Apollo Group






ITT Educational Services






New Oriental Education & Technology (NYSE:EDU)






Nobel Learning Communities






PrincetonReview (NASDAQ:REVU)






Strayer Education (NASDAQ:STRA)






Universal Technical Institute






Sources: CAPS, Yahoo! Finance, and Capital IQ, a division of Standard & Poor's. TTM = trailing 12 months.
*Expected to earn $0.05 in current fiscal year, compared to ($1.15) in the previous year.

While this industry group may be an oasis in the middle of the market's carnage, it's as important as always to be wary of valuations on these ideas. Strayer, for instance, boasts operating margins of more than twice the industry average. But the stock trades for 39 times trailing earnings. Although investors sometimes have to pay premiums for strong businesses, I believe that's a bit rich.

To learn more about these companies or other investment ideas, check out what our 120,000-plus CAPS community members have to say. Your opinions are more than welcome!

Related Foolishness:

Garmin and New Oriental are both recommendations of Global Gains. Garmin is also a pick at Stock Advisor, and Princeton Review is a choice at Motley Fool Hidden Gems. Try any of our newsletters with a free 30-day subscription.

Jennifer Schonberger does not own shares of any of the companies mentioned in this article. The Fool has a disclosure policy.