Carnival Corp (NYSE:CCL) is literally the flagship mega cruise line in the business.
While the market has had some tough times since the Great Recession hit, the past couple of years have made CCL a much better cruise line because of it.
What’s more, the improving economy both here and abroad have been a boost to business. Domestically, cruising is a very popular option for the young and old since it’s similar to an all-inclusive resort that moves around.
Once you get on the ship, you see a number of different places, go on excursions, eat on shore or in one of many restaurants onboard and sleep in the same bed every night. And that means only having to unpack once.
It’s convenient, safe and well organized.
And now, CCL is upping its tech game by adding watches with ship-based apps that adapt to your interests. Also, online packages are reasonable and fast, which isn’t always the case.
Plus, CCL has a number of lines it operates, from high-end names like Cunard and Seabourn to more mainstream names like Carnival, Princess and Holland America.
Another trend working in CCL’s favor is the graying of America. Cruising is very popular with the older demographic and the aging trend in the U.S. works to CCL’s strength.
What’s more, China is also an aging population. By 2030, there will be almost as many people over the age of 60 as there are people in the United States. And CCL and others are opening up across the ocean with new ships specifically built for the Chinese market.
Another wind at CCL’s back is low and stable fuel prices. There are few industries as energy-price dependent as cruise lines. Certainly, airlines consume a lot of fuel but ships that carry 5,000 or more passengers with restaurants, casinos and every other imaginable entertainment available while at sea, go through enormous amounts of fuel.
That means being able to buy forward and know that prices aren’t going to spike or be volatile, is very favorable for the industry. It’s then easier to control margins and other operational costs.
Finally, there’s the fact that the global economy is expanding once again. With ships all around the world, servicing every continent, a growing economy means more people are interested in travel.
There’s also the fact that the millennials are more experienced-based consumers than previous generations, so the would rather go somewhere and do something than buy stuff. That is very bullish for the travel industry and CCL has proven that it’s adaptable and capable of finding ways to appeal to this new demographic.
Bottom Line on CCL
CCL stock is up 28% year to date and still delivers a solid 2.7% dividend yield. This is a foundation stock that you can sit on while the baby boomers retire and the millennials begin to transition from adventure travel to leisure travel.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.
