Remember the Great Bubble Burst of 2000? IBM (NYSE:IBM) and General Electric (NYSE:GE) lost more than half their value between early 2000 and late 2002. From a high of $80, shares of Cisco Systems (NASDAQ:CSCO) plunged nearly 90% in two and a half years, as the nation fell into recession.

But not all stocks fared badly. As out-of-work Americans sought training to re-enter the workforce, shares of for-profit educator Apollo Group (NASDAQ:APOL) leapt tenfold in value over four years' time. After reading last week's earnings report, I wonder whether history will repeat itself.

Late Thursday, Apollo Group reported its fiscal Q1 2009 earnings. Now the stock's already well on its way to reclaiming its highs of 2004, entering its second straight day of gains even as the S&P sags. Why all the excitement? Well, Apollo:

  • Grew its revenue 24% year over year.
  • Posted a 40% rise in operating profit.
  • And netted 35% more profit in Q1 2009 than it had in Q1 2008 -- $1.12 per share.

Impressive numbers all, but they pale in significance to the two factoids I'll now throw at you:

Bigger than Minneapolis
First, Apollo's degreed enrollment surged to just less than 385,000. To put that in perspective, Apollo is now more than 19 times bigger than Harvard (counting undergrad and graduate students). More people now study at Apollo Group schools than live in Minneapolis.

More profitable, too
Second, Apollo Group generated $350 million in free cash flow last quarter, up 85% from last year. Based on its trailing-12-month results, this superstar stock now sells for less than 18 times its annual free cash flow.

Some might argue that's too expensive for a stock as big as Apollo; that a company "as big as Minneapolis" can't keep up the growth. But here's the thing: Apollo isn't a city, and it isn't constrained by physical limits. Its flagship business, University of Phoenix, may have physical campuses, but it's essentially an online organism. There's no theoretical reason why Apollo can't grow organically at the 16% annual rate analysts are predicting. And with $1.2 billion in cash on its balance sheet, there's also no reason it can't boost its growth rate with a few select acquisitions. It could swallow online rival Capella (NASDAQ:CPLA) whole, and eat either Universal Technical Institute (NYSE:UTI) or Lincoln Educational Services (NASDAQ:LINC) for dessert.

Think it couldn't happen? Study your history.

Extra-credit readings on Apollo are located in the Fool library:

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.