Buy: New Oriental Education & Technology (EDU)

A growing middle class in China translates to more parents investing in extra tutoring for their kids, analysts say -- and that bodes well for private-education firm New Oriental Education & Technology Group. The Beijing company, whose stock has almost quadrupled since it was listed on the New York Stock Exchange in 2006, is one of China's largest providers of foreign-language training and test-prep courses. It has opened 140 new learning centers over the past year. The company's recent initiative to decrease class sizes and increase one-on-one tutoring is not as profitable as a large-class model, but if it works, the move might bring wealthier, higher-paying customers, says Brandon Dobell, education services analyst for William Blair.

Sell: Apollo Group (APOL)

This for-profit college, which operates the University of Phoenix, generates most of its revenue from evening and online courses for working adults. But the Phoenix firm's 2012 fiscal third-quarter earnings were down 37 percent from the same period in 2011, and analysts don't expect a turnaround anytime soon. Traditional colleges and universities are offering more online courses. At the same time, regulatory changes to the way Apollo's recruitment counselors are compensated have also depressed student enrollment, says Jarrel Price, education services analyst for Height Analytics. A spokesperson for Apollo says the firm is adding more career-planning services and strengthening relationships with employers to help students compete in the job market.

Hold: Pearson (PSO)

Shares of this textbook maker have held steady over the past year. The London firm, which also trades on the New York Stock Exchange, has recently pushed into digital textbooks and standardized testing. But many states are cutting education spending and could delay purchases of new textbooks, says Alex Wisch, equity analyst for S&P Capital IQ. The firm says its new initiatives will keep it profitable even if it sells fewer textbooks.