Dear Mr. Berko:

Please tell me about DeVry University, its Keller Graduate School of Management and if I should buy the stock which trades at $24 a share.

My uncle, who retired from Monsanto Chemical, graduated from the DeVry Technical Institute in 1959. He said he got a better education than he would have gotten at Harvard because he attended classes only for an education and not to socialize, party and get away from home.

I’m thinking of getting a master of business administration degree from Keller because I can attend part time and do some of it online.

I would also like to buy 200 shares of DeVry Inc. if you think it’s a good buy at this price. Please advise me of your opinion.

J.W., Bettendorf, Iowa

Dear J.W.:

The president of a large public university confided to me last year that “over 65 percent of students entering college today lack the knowledge, learning skills and maturity to begin a bachelor’s degree program.”

He concluded that because his university (and many others) is mandated to allocate so many of its limited resources to assist and graduate low-level achievers, “we fail grievously in our responsibility to the remaining 35 percent.”

That’s one of the reasons the University of Phoenix, Western International University, American Academy of Business, DeVry University and Keller Graduate School, all of which are owned by publicly traded, for-profit corporations, have been so successful.

Students attending these and other for-profit schools don’t require remedial courses in math, study skills, English, reading, communication skills, history, etc. They are there because they want to further their education to improve their earning capacity, not to get a hangover, meet chicks and prove they’re cool.

DeVry Inc. (DV-$26.05) has solid parentage. Founded in 1931 as DeForest Training School, DeVry Institutes eventually became a subsidiary of the Bell & Howell Corp. In 1987, the Keller Graduate School of Management purchased DeVry and in June 1991 took the merged company public at a split-adjusted price (three 2-for-1 splits) of $1.25 a share.

Since DV’s 1991 initial public offering, revenues, earnings and book value have increased each year. In 1992, DV’s revenues were $172 million, net income was $7 million, or 7 cents a share, and book value was 17 cents. Last year those revenues had risen to $648 million, net income $67 million, or 95 cents a share, and book value rose to $5.06.

DV, like all the other private, for-profit colleges, doesn’t feed on tax dollars and doesn’t employ high-paid lobbyists to siphon money from the state legislature.

DV provides business- and technology-focused education to 47,000 serious, nose-to-grindstone, goal-determined students through 19 campuses. Its Denver Technical College has two huge campuses in Colorado, and its Keller Graduate School of Management has 36 campuses nationwide.

This accredited, no-nonsense institution is expanding its reach and recently purchased Ross University for $305 million. Ross operates is an accredited medical school on Dominica in the West Indies and a veterinary school on St. Kitts and Nevis.

The schools had a combined 2002 enrollment of 2,500, generated $63 million in revenues and $18.4 million in net profits.

DV is based in Oak Brook, Ill., has 70 million shares outstanding, no long-term debt and trades at 28 times earnings versus an average price-earnings ratio during the past 10 years of 36. DV’s P/E is much lower than those of its competitors, such as Apollo Group at 53, Corinthian Colleges at 39, Strayer Education at 43 and University of Phoenix online at 68.

Meanwhile, demographic trends should drive enrollments higher as the college-age group is expected to rise about 12 percent annually over the coming decade. However, adults over 25 make up almost 50 percent of post-secondary education enrollment. Today’s students recognize that the median income for those with a bachelor’s degree is $41,900 vs. $50,400 for those with a master’s.

I think you might do well with a master’s from Keller. Because Keller’s professors bring years of decision-making and hands-on business experience to their classes rather than book theory, it enjoys a worldwide reputation.

DV has a strong cash flow and the addition of Ross and other potential acquisitions could move its earnings much higher than current projections. An educated guess puts DV’s 2007 earnings at $1.60 a share. Using an acceptably higher P/E of 30, I think DV could be trading in the mid- to high $40s a few years out. Buy it.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.