The caveat to Carnival’s recovery from an investor perspective is that it’s not fair to look at a stock chart for historical perspective. The company had to take on a lot of debt at high rates and print new shares at low stock prices to make it through the prolonged pandemic shutdown. fusion markets review Carnival’s long-term debt has more than tripled to nearly $32 billion — and its share count has nearly doubled — since fiscal 2019. It will have to do more than just return to prior revenue and margin levels to surpass its pre-pandemic earnings records on a per-share basis.
Below, we look at the top three cruise line stocks with the best value, fastest growth, and best performance. The cruise line industry is part of the broader travel and tourism industry, focused primarily on providing sea-based vacation experiences. Companies in the industry own and operate cruise ships in various destinations worldwide, offering a variety of itineraries and themed cruises. The big cruise line companies include Carnival Corp. and Norwegian Cruise Line Holdings Ltd. Even when cruise lines have built some momentum, news of potential travel restrictions caused by the delta and omicron variants have sent their stock prices tumbling.
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Combined with its 50% interest in a joint venture, TUI Cruises, RCL boasts a 61-ship fleet with another 15 on order. Cruise line stocks have performed well so far in 2021, but analysts are still sitting on the sidelines amid cloudy reopening plans. Cruise companies are still continuing with their new vessel orders despite choppy waters in an uncertain consumer spending environment — and face the risks of piling on more debt. Carnival doesn’t get top honors here because Royal Caribbean’s margins and passenger fandom are stronger. However, Carnival will be in the best positive to market its product when it’s time to turn on the marketing spigot again. It has retired a few vessels, but they were its less productive ships.
- Norwegian offers a variety of cabin categories, which enables it to accommodate every type of traveler.
- This is also true if you’re close to retirement, since you’ll have the benefit of having your future under the watchful eye of an advisor.
- Since all passengers must be vaccinated, Norwegian is able to offer mask-free cruises with no social distancing requirements.
- Cruise line stocks have performed well so far in 2021, but analysts are still sitting on the sidelines amid cloudy reopening plans.
- I do like the direction Carnival is headed, but it has a long way to go before it’s in the clear.
Here’s a look at the three largest cruise line stocks based on market capitalization. As major players, they could prove to be bellwethers for cruise stocks overall. Carnival Corporation & plc is a global cruise company that operates several well-known cruise line brands. Among them are Carnival Cruise Line, Princess Cruises, and Holland America Line. Established in 1972, the company has become one of the largest players in the cruise industry, offering a wide range of travel options to destinations all around the world.
Most investors know by now that Carnival is on a multiyear quest to dig itself out of the debt pile it amassed during the pandemic. So, if that debt-paydown happens slower than thought, it can increase risk to the company. The company’s world-class and steadily improving fleet puts it in a strong position to capitalize on robust and growing demand for cruising.
“They’re raising prices naturally — fuel or no fuel, the demand is there for them to be raising prices,” Scholes said. As inflation surges, airfare tickets have reached sky-high prices, with international airfare up 26% from 2019, according to an August estimate by fare-tracking company Hopper. Carnival is sailing in the right direction, and that became crystal clear last week when it announced the closing of $500 million in first-priority senior senior secured notes at 7%.
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To ensure its continued performance improvement, Royal Caribbean has implemented a three-year initiative. Goals the company expects to reach by 2025 include exceeding 2019 earnings and returns on invested capital. Prioritizing public health, Carnival aims to restore consumer confidence as a leading force in global economic recovery, travel and tourism. The company still has a strict vaccination and pre-cruise COVID-test policy in effect for cruises of 16 nights or more. Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear).
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The 2021 Cruise Industry News Annual Report indicates that the Caribbean, Mediterranean and Asia/Pacific regions account for the three largest markets of the world’s cruise capacity. However, a number of cruise lines canceled Asia cruises for 2022. Coming in as the third-largest cruise line in the world, Norwegian has a fleet of 18 ships that sail to more than 300 global destinations. The company planned to expand its fleet by six ships between 2022 and 2027.
You can stay informed about Carnival’s performance by regularly checking their investor relations website, reading financial news, and monitoring updates from reputable financial sources. Argus Research analyst John Staszak is tepid on both RCL’s shorter- and longer-term outlooks, and maintains a Hold recommendation on the cruise stock. While valuations for these recovery stocks might be elevated given their run higher this year, the recent pullback in cruise line names could be a potential entry point for those looking to ride out the choppy waters.
The company’s booking volumes likewise hit an all-time high, pushing cruise occupancy and revenue beyond 2019 levels, he said. Compared to 2019, before the Covid-19 pandemic decimated the cruising industry, December ticket prices are up 43%. Most companies taking on fresh financing in today’s challenging climate for borrowers are facing high interest rates. It’s replacing a loan made in a more desperate time in its recovery efforts. The new notes will clear out obligations that were more taxing to Carnival’s resources.
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Investors in search of safe stocks may want to stay away from this industry right now. These are the cruise line stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value.
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More recently, though, some of the wind has been taken out of cruise stocks’ sails. After seeing better-than-expected results in 2022, Royal Caribbean is focused on improving guest repeat rates and improving margins to enhance cash flows and create more discretionary capital. Royal Caribbean stock was the best performing in 2020, even if the etoro victory is only on a relative basis. It should repeat the feat in 2021 as it leads the way back to revenue-generating cruises. “We are well positioned to drive 2024 pricing higher, with less inventory remaining to sell than the same time last year, despite a capacity increase of 5%,” the company’s CFO David Bernstein added during the call.
And an average price target of $31.00 implies at least some (albeit modest) upside of about 5% over the next 12 months or so. Considering how much the pandemic continues to affect cruise lines, investing in them is relatively risky. The cruise line business has high operating costs, and many cruise companies have lost a lot of money.
You can buy shares of Carnival directly through any brokerage account. The leading cruise ship operator is benefiting from the growing demand for cruises. That should enable the how to become a cybersecurity engineer in 2022 company to increase profits and cash flow in the coming years. The company reported $3 billion of adjusted net income in 2019, which matched its previous record high in 2018.