Best Cruise Line Stocks for 2023 The Motley Fool

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Royal Caribbean Group stock rises Monday, still underperforms market

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 best mortgage lender 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.

• It has a 100% vaccination policy that it extended indefinitely in November 2021.
• And some stocks, like Lindblad Expeditions Holdings, have regained everything lost through 2020 and then some — now trading near an all-time high.
• Since Carnival is the largest player in the game, it may be the best long-term investment, especially since prices are low right now.
• The fuel service industry also saw a significant drop in performance, reflected in the incredibly low price of gas.

While that’s a vast improvement from the $1.8 billion loss in the second quarter of 2022, it’s a reminder of how its debt continues to weigh on the company. That brought customer deposits — initial payments required to confirm a reservation — to an all-time high of $7.2 billion, well above the previous record of $6 billion set in 2019. With rising environmental awareness and a need to preserve the environment, demand for such expeditions should grow. Royal Caribbean launched two ships, Wonder of the Seas and Celebrity Beyond, in the first quarter and second quarter, respectively.

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The company is incorporated in Liberia and headquartered in Miami, Florida. Norwegian Cruise Line is a cruise line incorporated in Bermuda and headquartered in Miami. Finder.com is an independent comparison platform and
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The cruise operator intends to increase its fleet by nine ships by 2027. Well-educated investors have an advantage over other investors since they understand the cruise ship industry and how well-positioned the cruise lines are. Hedge funds have lost more than $6 billion on bad bets against cruise ship and hotel operators this year, the Financial Times reported. Of this, the three cruise ship companies account for almost $3 billion of the total mark-to-market losses, according to figures from S3 Partners seen by the outlet.

Hence, it’s effectively shielded from the effects of the Fed’s rampant rate hikes. Moreover, the company’s aggregate debt load is significantly less than its competitors. Also, CCL generated more than $300 million in adjusted EBITDA in the third quarter, expecting to narrow down net losses in the upcoming quarters. These forecasts are highly encouraging, considering the seasonality of its business.

Advantages of Cruise Line Stocks

Carnival and Royal Caribbean are not so popular in the S&P 500 and are two of the ten most-shorted stocks in the index. Such a resilient recovery has confounded the expectations of short-sellers – many of whom were predicting a rout for the industry. Fears of recession persist, however, and a falloff in consumer spending could potentially spell bad news for cruise operators. Other large short positions in Airbnb and Booking.com have also backfired after those stocks jumped 70% and 44% year-to-date respectively. Noah is an American copywriter on a mission to help clarify the nuances of the financial world.

As travel became more restricted, cruise lines were among the first in the travel industry to see setbacks. Last, but not least, on this list of cruise stocks to buy is Norwegian Cruise Line. Royal Caribbean has seen its stock price drop 30% on second wave fears. Now, the cruise line stock will rebound by more than 50% as those fears abate and business trends recover over the next 12 to 18 months. The world’s biggest cruise line operator, Carnival, doubles as one of the best cruise stocks to buy now. Against that backdrop, stocks will keep rallying — especially recovery-sensitive, mobility stocks, like cruise stocks.

Hence, one has to look more closely at the cruise line stock’s business and financials to decide whether to invest. Harry Markowitz, a Nobel laureate in economics who died last month, transformed modern investing with his teachings about how rigorous diversification can reduce risk. A decade ago, during a volatile stretch in the stock market, he told me that ordinary investors would be better off if they forgot about individual stocks and bought broad low-cost stock and bond index funds instead. Overall, we continue to see robust demand, financially healthy, highly engaged consumers that are excited to sail on our brands. Secular tailwinds continue to benefit us as consumer preferences shift from goods to experiences.

Known for its media and entertainment production, Disney has now reached a market cap of $323 billion. This gives the company a competitive advantage, meaning now could be a great time to invest. Part of this may be https://1investing.in/ due to the fact that Lindblad’s ships are typically smaller in size and have a lower guest capacity. Astonishingly, Lindblad has bounced back from the market crisis much better than any other stock on this list.

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To this end, investors have felt good enough about Carnival’s future to take the stock price almost 90% higher since the beginning of the year. And the stock trades at a price-to-sales (P/S) ratio of just 1.1, well below historical averages. In the second quarter of 2023, approximately 3 million passengers took a Carnival cruise, up from 1.7 million in the year-ago quarter. OSW ended the quarter with $30.9 million in cash and $13 million available under its credit facility.

While these stocks remain cyclical, industry consolidation has created a few winning companies. Norwegian Cruise Line Holdings (NCLH -1.8%) is a hit among casual cruisers and is known for its laid-back atmosphere. Norwegian offers what it calls “freestyle cruising,” meaning its cruises have no dress codes, no set dining times, and no assigned seating. Authorities said crew members and passengers are in a “difficult situation,” but, despite their circumstances, “the atmosphere on the ship is good and everyone on board is fine.”

With the economy normalizing and a pent-up demand for travel, the company plans to expand its cruise line business by adding three more ships this year. Disney has a track record of delivering solid growth in revenues and profits. The company’s Disney+ and other streaming services have gained significant consumer traction in the past couple of years. The ETF has investments across some of the most well-known cruise companies. Given its lower expense ratio of 0.45, it makes sense to invest in the fund. The company provides expedition cruising and adventurous travel opportunities through its fleet of ten owned expedition ships and five seasonal charter vessels.

These 20 companies are big winners this earnings season. What do analysts think about their stocks?

We selected firms that operate in the cruise industry, picking stocks based on future growth potential, underlying business fundamentals, optimistic analyst coverage, and strong hedge fund sentiment. On a positive note, a strong job market, higher household savings, and pent-up demand for travel from the Covid-19 pandemic shutdowns should keep the industry sailing. As most of the cruise company’s stock prices are already battered down, investing in these stocks has become attractive. We took a look at Insider Monkey’s database of 943 hedge funds for last year’s fourth quarter to sift out their top cruise stock picks. Care has been taken to ensure that the companies listed are either directly involved in providing cruises or related services.

The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy. Built in 2021, the Ocean Explorer is an Infinity-class vessel which can accommodate 134 passengers. According to Aurora Expeditions’ website, the ship was “purpose-built for expedition travel to the world’s most remote destinations.”

• Since all passengers must be vaccinated, Norwegian is able to offer mask-free cruises with no social distancing requirements.
• On a positive note, a strong job market, higher household savings, and pent-up demand for travel from the Covid-19 pandemic shutdowns should keep the industry sailing.
• In addition, an ETF fund eliminates the need to have a fund manager as it is rule-based.
• Leading cruise companies have been putting much effort into accelerating digital transformation and integrating new technology to get access to data-driven insights, raise hygiene standards, and enhance the guest experience.

That reflects the strength the business anticipates for the remainder of this year and into 2023. Based on this, management stated that it anticipates load factors to keep rising this year, exceeding 100% by the end of 2022. Given their well-established industry presence, this stock shows some promise for investors. Some of their notable customers include the cruise lines on our list, such as Carnival, Norwegian, and Royal Caribbean. It seems they may have gone public at one of the least advantageous times, considering the current performance of hospitality stocks. After going public just in 2018, Fincantieri’s market performance has decreased each year until finally seeing growth in 2021.

Analysts anticipate more increases as the sector’s recovery speeds up in the coming months. Major cruise ships are just now starting to set sail again, and people will be seeking opportunities to enjoy the travels they haven’t been able to for over a year. That combination implies a fair 2021 price target for CCL stock of over $31 — or more than 70% above where shares trade today. All of that together makes Carnival one of the best cruise stocks to consider buying now. The company’s ships have been docked at port for the better of the past couple of years.

Accordingly, CCL stock has struggled under the weight of its massive debt load. However, in recent quarters, revenues have started to flow in at an incredible pace, and are likely to continue growing at a robust clip. Carnival’s sales forecasts are promising, with bookings for 2022 representing growth over 2019’s performance.