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"Wanted: A sector with companies that deliver earnings and revenue growth in a weak economy. Strong stock returns are also a plus."

Investors these days clearly want safe havens, but the question is, where can you find them after three years of economic malaise and a weak stock market? The answer for some investors: go back to school.

From the Feb. 7 broadcast: College may cost a lot of money, but there's one area of education that might make you some bucks: education stocks. For-profit colleges, universities and technical schools are scoring high in the market right now. They jumped 26 percent in the last 12 months, even as the S&P 500 lost almost as much. Wall $treet Week with FORTUNE talked to analyst Gary Bisbee at Lehman Brothers about his favorite stocks. Apollo Group (APOL), up 41 percent in the last year, tops Bisbee's list. Apollo caters to working adults who want to move up in their careers -- a nice niche, Bisbee says. He also likes Corinthian Colleges (COCO), up 62 percent in the last year. Aging baby boomers and a growing need for healthcare workers make its healthcare training programs attractive. Career Education (CECO) also made Bisbee's list, thanks to solid demand for programs such as cooking, business, and art and visual communications. Its stock is up 32 percent in the last year. One potential risk for education stocks: a recovering economy could prompt investors to take profits. Bisbee does not own any of these stocks personally, and Lehman has no investment banking relationship with the companies mentioned.

For-profit colleges and training institutes have weathered the current downturn better than most, and their stocks reflect it: Morningstar's education index is up almost 54 percent for the past three years. A bevy of financial results from postsecondary education companies such as Apollo Group, Career Education, ITT Educational Services and Education Management highlighted strong revenue and earnings growth. And, unlike many companies, most for-profit schools recently raised their expectations for 2003.

"These companies will continue to do well, fundamentally speaking," said Alexander Paris, an analyst with Barrington Research. "Generally, they are countercyclical. When the economy is soft and there are less jobs, enrollment goes up."

Or put another way: when people can't find paying work, many of them end up back in the classroom.

Analysts said for-profit schools have a number of demographic factors helping them out. For starters, Generation Y, also known as the baby boomers' offspring, are growing up. Factor in the need for worker re-education and the next decade and the prospects look promising.

Meanwhile, for-profits have carved out a strong niche in the education market. Primarily competing with community colleges, these schools have been able to be more customer-oriented and adaptable than their non-profit rivals, notably private and public institutions.

Many training schools claim a student job placement rate of at least 80 percent, according to company estimates compiled by Barrington Research. That could be why schools are among the top-performing companies in the services sector. Industry data shows that the sector's revenue increased almost 39 percent from a year ago, and that standout growth has attracted Wall Street. Post-secondary stocks as a group returned 100 percent, 38 percent and 28 percent for the 2000, 2001 and 2002, respectively, according to Barrington Research.

Executives at the companies remain upbeat. Although some analysts have worries about future enrollment because many employers are pruning benefits such as tuition reimbursement, most companies that recently reported December quarter results raised their 2003 guidance and said enrollment remains strong. A sampling of recent earnings results:

• Apollo Group, which counts the University of Phoenix Online as a tracking stock, reported strong fiscal first quarter earnings in December. First quarter revenue surged 35.4 percent to $308.9 million from $229.2 million a year ago. Net income was $56.7 million for the three months ended Nov. 30, up from $33 million a year ago.

  Executives for Apollo, which cut costs amid increased enrollment and tuition rates, were optimistic. The company predicts 2003 revenue growth of about 30 percent. Considered an industry leader, Apollo has 164,699 students enrolled.

  Meanwhile, Apollo keeps adding education programs to keep up with economic tastes. "One of the things that's always a big part of our strategy is to always be in the development process," CEO Todd S. Nelson said. "As the labor market shifts we're 60 to 90 days away from having a new program."

• Career Education late last month reported 2002 revenue of $751 million, up 42 percent from a year ago. Net income for the year was $67.5 million, or $1.42 a share, up 76 percent from a year ago.

  Career Education, which has 51,100 students, also gave a bullish 2003 outlook, including a revenue target of $940 million to $950 million for the year.

  The company saw strength in its culinary, criminal justice and educational programs and boasted about a placement rate of 93 percent. "The future looks strong," said CEO John Larson on a conference call.

• ITT Educational Services also checked in with strong results. Like rival DeVry, ITT is closely watched by analysts because it is closely linked to the technology sector because it offers primarily information technology training.

  However, ITT is broadening its curriculum to become less reliant on the tech industry. The company eliminated two locations in Silicon Valley. "The Silicon Valley economy is not likely to improve," said ITT CEO Rene Champagne. "If a rebound in technology becomes visible in the San Francisco area, we will reenter the market with one or more colleges."

  The company's diversification efforts have paid off, so far. Despite continuing softness in the tech sector, ITT reported a revenue gain in 2002, to $465 million from $410.5 million in 2001. Net income for 2002 was $43.8 million, up from $33.7 million. The results were ahead of expectations and like its peers, ITT gave an upbeat outlook.

Apollo, Career Education and ITT are just some of the players in the for-profit education sector, but their results are on par with peers. In a market devoid of growth, postsecondary stocks are showing a lot of it. The recent spate of results silenced critics, who were expecting a letdown. One analyst who was recommending Apollo as a "sell" upgraded the company to "hold" after its earnings report and then dropped coverage of the stock.

The big question is whether strong results will boost the stocks further -- especially when you consider the industry carries an average price-to-earnings ratio of about 44. Analysts that remain upbeat say the publicly-traded postsecondary education companies have just a small sliver of a huge market and plenty of room to grow.

Nevertheless, momentum can switch dramatically in the school sector and may not be for the faint of heart. In a research note, Legg Mason analyst Jerry Herman noted that a sustained economic recovery, valuation and the laws of large numbers may be wild cards for the future.

As a buffer, Barrington's Paris notes that some rotation is a good idea in the sector. For example, Apollo and Career Education are considered counter cyclical -- they go up when the broader market goes down -- while players such as DeVry and ITT essentially follow the economy.

Yet Paris recently gave Career Education, DeVry, and ITT Barrington's "outperform" ratings because he considers them cheap, with more room for the price to rise. On the other hand, Paris tabbed Apollo with an "underperform" rating -- he believes that the stock is so highly-valued, even the slightest blip on the company could send share prices down.

Some analysts say the cyclical nature of the school sector is overblown, but they caution investors to watch how events unfold in 2003. Education stocks got off to a weak start in 2003 as investors bet on an economic recovery, but in recent weeks, economic worries and stellar financial results from individual companies have given school stocks a boost.

But even with the wild cards, many analysts note that the postsecondary education stocks will benefit from long-term trends.

"We're still in the early stages here," said Trace Urdan, principal of research firm and investment bank Think Equity Partners. "Valuation is a constant issue, but if you step back and look at the demographics it changes your perception. There are 40 million working adults and that's a big market opportunity for these types."