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Cruise Line Stocks: Who Makes the Grade?

Industry leaves disaster in its wake with Norwegian's full-steam IPO

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What a difference a year makes.

Last January, the cruise line industry was shaken after Carnival’s (NYSE:CCL) Costa Concordia ran aground off the coast of Italy, killing 32 passengers and crew and triggering a maelstrom of controversy over the industry’s safety practices. Share prices plummeted not only at Carnival, but at rival Royal Caribbean (NYSE:RCL) and others under the weight of lower sales and cancelled bookings during the industry’s all-important “wave season” when most cruises are booked.

However, fast forward to last Friday, when Norwegian Cruise Line (NASDAQ:NCLH) shares soared by more than 30% in an IPO that raised $447 million. RCL and CCL have recovered the ground they lost and more. Bookings have rebounded, and most operators are steering clear of the hefty discounts and sweet promotions that characterized the early 2012 market. This year, the worldwide cruise market is estimated to reach $36.2 billion, up 4.8% year-over-year, according to Cruise Market Watch’s 2013 forecast. That includes expectations of a whopping 20.9 million cruise passengers, or 3.3% more than 2012.

As is the case with all consumer cyclicals, though, cruise lines are vulnerable to economic fits and starts — and European woes show few signs of ending anytime soon. So, let’s break down the prospects of the top three cruise line stocks to see which, if any, look fit to board:

Article printed from InvestorPlace Media,

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