Australia’s education sector stocks have been going through it of late, but one Aussie stock picker tells us that it could be about to change.

Speaking on our Switzer Investing TV show this week, Shaw and Partner's Dawes says that news out of the Federal Government could spell a turnaround for a current and former market darling.

First up would be IDP Education (ASX:  IEL).

IDP Education, which helps international students apply to study abroad and runs English language testing services like IELTS, has had a rough ride. The stock has fallen about 22% in the past month and almost 65% over the past year as tighter government restrictions on student visas and a post-COVID slowdown in international student demand took their toll.

The company was once considered a market darling, buoyed by its global footprint and strong links with Australian universities. But with visa processing delays and stricter migration caps dampening new student arrivals, IDP’s earnings outlook has dimmed.

By contrast, smaller rival NextEd Education has been quietly surging. The ASX-listed training provider, which offers vocational and higher education courses to both local and international students, has gained 35% in the past month and an astonishing 125% over the past year. Investors appear to be betting that its smaller scale and domestic flexibility may help it benefit faster from any government shift toward encouraging international enrolments again.

According to Shore & Partners’ senior investment adviser Adam Dawes, both may feel the tailwind of a coming announcement:

“The government is looking to change the way they’re counting student visas and making it a little bit easier for student visas to come back into Australia,” he said on Switzer Investing TV. “That’s really going to benefit a market darling like IDP Education or a smaller one, NextEd Education. We expect an announcement from the government in the next couple of weeks.”

Dawes said he personally holds some NextEd stock and has been watching the space closely. “Don’t put the kitchen sink in there,” he cautioned, “but something hopefully — if something does happen — might turn those little stocks around and potentially might give us some upside.”

The long-term story for Australia’s education exports remains strong — it’s the country’s third-largest export industry, employing thousands and generating billions in economic activity. But it’s also a sector tightly linked to policy shifts and international sentiment.

For investors, Dawes’ comments are a reminder that keeping an eye on the news — particularly around policy and migration — can offer clues about where the next market moves might come from. Still, education stocks can be volatile, and as always, it pays to do your own research before taking a position.