Could Stride Stock’s Cash Flow Spark the Next Rally?

We think Stride (LRN) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.

What Is Happening With LRN

LRN is available at a significant discount to its 3-month, 1-year, and 2-year highs. This can be attributed to severe platform implementation issues in mid-2025, leading to 10,000-15,000 fewer enrollments and higher costs. Ongoing legal claims regarding prior enrollment figures have also introduced uncertainty.

Here is what’s going well for the company: Strong demand persists, with Career Learning enrollments rising 20% in Q1 FY26. A solid balance sheet holds $749.6 million cash and a 0.32 debt-to-equity ratio. Fiscal 2026 revenue guidance remains $2.48 billion-$2.555 billion, highlighting resilience and a valuation discount due to recent hiccups.

LRN Has Strong Fundamentals

• Cash Yield: Stride offers an impressive cash flow yield of 10.4%.
• Growing: Revenue growth of 17.3% over the last twelve months means that the cash pile is going to grow.
• Valuation Discount: LRN stock is currently trading at 55% below its 3-month high, 59% below its 1-year high, and 59% below its 2-year high.

Below is a quick comparison of LRN fundamentals with S&P medians.

*LTM: Last Twelve Months

But What About The Risk Involved?

While LRN stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. LRN wasn’t immune to market turmoil either. It fell about 58% during the Global Financial Crisis and 59% in the Covid sell-off. The 2018 correction wiped out nearly 49%, while the inflation shock last year caused a smaller dip, around 33%. Even with solid fundamentals, LRN shows that deep pullbacks can happen when the market turns. Just a reminder that risk is always there, no matter how strong the story looks. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read LRN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

If you want to see more details, read Buy or Sell LRN Stock.

Other Stocks Like LRN

Not ready to act on LRN? You could consider these alternatives:

1. Oracle (ORCL)
2. ServiceNow (NOW)
3. Coinbase Global (COIN)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Positive revenue growth
3. High free cash flow yield
4. Meaningful discount to 3M, 1Y, and 2Y highs

A portfolio that was built starting 12/31/2016 with stocks that fulfil the criteria above would have performed as follows:

• Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
• Win rate (percentage of picks returning positive) of >70% for both 6-month and 12-month periods

Stock Picking Falls Short Against Multi Asset Portfolios

Individual picks are volatile but diversified assets offset each other. A multi asset portfolio helps you stay the course capture upside and reduce downside.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices