Carnival Corp (CCL) — This is the world’s largest cruise company with 10 brands of cruise lines in North America, Europe, Australia and Asia, and more than 100 ships.
CCL stock rallied nearly 4% on Dec. 18 following the company’s fourth-quarter and fiscal 2015 (ended in November) earnings report. Q4 revenue fell slightly year over year to $3.71 billion, but earnings of 50 cents beat the consensus estimate by 9 cents. And while full-year revenue fell 1.1% to $15.7 billion due to currency headwinds, Carnival reported a 42% jump in profits to $1.76 billion, or $2.26 per share.
Currency weakness is being offset by increased global demand for cruises, lower fuel prices and higher revenue yields per available lower berth day, which is a popular measure of revenue for cruise ships.
S&P Capital IQ Equity Research rates CCL stock a “Buy” with a price target of $64.
CCL stock is in a well-defined bull channel that began in October 2013 around $32. The support line of the channel connects with a test of the 2013 low and a low in October 2014 at about $35. Three more successful tests appear on the chart at $43 in May 2015, $46 in August and, most recently, at about $47.
I believe the latest test, which came on very high volume from an extremely oversold MACD, is a classic selling climax. Thus, buy CCL stock at $50 with a trading target of $60 for a potential gain of 20% within four months, plus dividends (current yield 2.4%).
