What happened Worries over China's crackdown on for-profit education companies have cost their shareholders dearly. Over the past month: GSX Techedu (NYSE: GOTU) -- also known as Gaotu Techedu -- has fallen 41.5%; New Oriental Education (NYSE: EDU) is down 42.7%; and TAL Education (NYSE: TAL) has lost 50%. And yet, on no obvious news, on Wednesday, shares of these Chinese education stocks began to bounce back. As of 10:45 a.m. EDT, TAL stock was up 6.7%, New Oriental was up 8.6%, and GSX Techedu had popped by 11.2%. The question is: Why? Image source: Getty Images. So what The answer may be as simple as: Valuation. While none of these companies looks obviously "cheap," after their sell-offs, TAL Education costs barely 4 times trailing sales, New Oriental sells for 3.6 times trailing sales, and GSX seems like an even better bargain at only 3 times sales. Based on the price-to-sales ratios, some analysts believe these stocks are now on sale. Last week, for example, Goldman Sachs downgraded GSX Techedu stock, but set a $20 price target on the shares regardless -- implying there's 25% upside in the stock even after Wednesday morning's rally. Similarly, the analyst set a $14.20 price target on New Oriental stock (implying a 55% upside), and said that TAL stock should hit $53 a share in the next 12 months. With TAL shares changing hands at around $29.60, that means the analyst thinks the stock could go up by as much as 79%! Now what At least, that's what Goldman Sachs thinks will happen over the next year. On Wednesday morning, investors appeared to be bottom-fishing in response to the optimistic outlook. And yet, danger still lurks in these waters. As Al-Jazeera recently reported, the situation around the for-profit education sector in China remains fluid, and most of the developments so far have been of the "bad news" variety, with the government capping the rates that some companies can charge for tutoring services, fining others for "false advertising," and threatening to ban still others from marketing tutoring services for kids under 7, while requiring that teachers employed by these schools be licensed to teach. In total, Bloomberg Intelligence recently warned that these measures "could decimate revenue throughout the industry." If that's the case, investors will want to be prepared: Those low trailing price-to-sales valuations may not look so enticing once the sales go away. 10 stocks we like better than New Oriental Education & Technology GroupWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and New Oriental Education & Technology Group wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of June 7, 2021 Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends New Oriental Education & Technology Group and TAL Education Group. The Motley Fool has a disclosure policy.Source