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Trade of the Day: Carnival Corp (CCL) Setting Sail

Carnival Corp (NYSE:CCL) — Carnival Corp is the world’s largest cruise operator, with over 100 cruise ships as well as tour companies. Their ships are represented by several fleet brands.

Weak oil prices and solid available lower berth day (ALBD) increases (4.3% in fiscal year 2015) should continue to sustain its growth. CCL is on a November 30 FY, and Standard & Poor’s estimates earnings of $3.21 in FY 2016, up from $2.26 in FY 2015.

They forecast FY 2017 earnings at $3.80 and have a target of $57 on a fundamental basis, which assumes a FY 16 P/E of 17.8X vs. a three-year forward price-to-earnings ratio of 19.9X. Credit Suisse analysts have a target price of $59 based on CCL’s third-quarter 2016 EPS surprise of $1.92 vs. their estimate of $1.87 and “the street’s” estimate of $1.89.

The stock pays an annual dividend of $1.40 for a current dividend yield of 2.9%.

CCL topped at over $55 in late December 2015 before plunging to about $40 early in February. A rally in April to $53 and a subsequent decline formed a resistance line that held until last Monday. Following the breakout through its bearish resistance line, now at $46.50, buying momentum drove the stock higher as it pierced its 200-day moving average ($48.24).

On the breakout MACD turned positive as the trend turned bullish. The trading target for CCL is $55, however, if the December high is exceeded, the stock could trade much higher. Thus, CCL could provide longer-term growth as well as a solid trading opportunity since it is the leader in the growing cruise industry.

ccl breakout tgt 55
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