Recently, I had to take an exam for yet another license my industry requires me to have. Aside from feeling like I’d given birth to a compliance officer afterwards, I came away from the experience, newly minted license in hand, with an investment idea.

I took the exam, on a computer workstation of course, at one of the many testing centers owned and managed by British education and multi-media publisher Pearson PLC (NYSE: PSO). Although my exam was specific to the financial industry, qualification exams for other professions are also administered at the centers, including nursing and engineering to name a few. 

Honestly, when I first looked at the stock, I was not impressed.

As you probably know, I’m not a chart guy. But if you go by these tea-leaves, the wiggles aren’t encouraging — and neither are the fundamentals.

Earnings Per Share (EPS) has declined, on average, 131% on an annual basis over the last two years. Annual revenue has shrunk by 9.5% on average for the same period. But the short-term pain may be paving the way for long term gain.

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Pearson, like most large publishing and media companies, is grappling with the disruptive technological shift from print to digital. In January, the company announced plans to divest from a 47% ownership stake in print publisher Penguin Random House to raise cash and focus its efforts in the digital educational publishing space (textbooks). The company also plans to cut e-book rental prices in its higher education publishing unit by 50% on some 2,000 titles. 

Although that move sounds troublesome for near-term revenue, it shows the company’s commitment to quickly growing market share in the digital space. Pearson has also backed that up internally with job cuts and other cost cutting measures.

The macro story is the coming shift in the American workforce. The Trump administration came into office on the promise of an improved job market. Though one crucial component of that issue is retraining, any discussion of this matter is typically buried on page 16. This focus on job creation combined with the administration’s stance on education reform, with the appointment of public/private partnership advocate Betsy DeVos as Secretary of Education, could be a perfect storm for a company like Pearson. From digital textbooks to qualification exam distribution, the company seems poised to profit.

How do the fundamentals look going forward? After posting a $3.13 per share loss for 2016, the forecast calls for EPS of 66 cents for 2017 despite an anticipated 4% decline in revenues from $4.97 billion to $4.76 billion. If the management delivers, the stock price at its current level is an absolute bargain at just 1.1 times sales and gross margins of 55%. Shares are basically trading at the company’s tangible book value.

The balance sheet is also in decent shape, with $1.8 billion in cash and short term investments on the books and comfortable long term debt-to-capitalization of 36%.

Risks To Consider: Pearson’s plan to ramp up its product offerings for the brave, new digital world could be slowed down by its noticeably declining revenue. However, it appears that the company is taking the necessary financial measures to deal with this successfully. Its cash pile is also a good insurance policy. 

Also, Pearson is registered in the United Kingdom. By default, the company may be receiving some pre-Brexit punishment by the market. But Pearson is a multinational concern with most its revenue coming from North America. Brexit worries are just noise.

Action To Take: Pearson shares currently trade around $7.90 with a forward P/E of 12.75 and an attractive 8.35% dividend yield. Successful execution by management in achieving near-term EPS targets and the long-term shift toward a digitally focused business should propel the stock price higher towards the $10 range. Patient investors would enjoy 18-month total returns north of 30%.

Editor’s Note: Tech companies have a history of turning stockholders, secretaries and even janitors into “overnight” millionaires. In 2017, innovations in virtual reality will do the same for owners of these 2 stocks.