For investors in Carnival Corporation (NYSE:CCL) and CCL stock, this past year has been a good one. Indeed, on a year-over-year basis, investors have more than doubled their money. The near-term returns look great. However, keeping Carnival’s stock price in context, it’s still roughly 50% down from pre-pandemic levels.
That’s no surprise.
The cruise line sector is one that has been among the hardest-hit as a result of the pandemic. Indeed, with revenues near-zero, and capital costs remaining elevated, the pandemic reopening we’re all hoping for has become essential for Carnival’s survival.
It appears there’s optimism among investors today, as evidenced by the impressive rally in CCL stock. I’m generally bullish on this reopening play, as I do think there’s a tremendous amount of pent-up demand for cruises coming out the other side of this terrible pandemic. When we’re all allowed to go for that cruise that may have been postponed due to the pandemic, there’s going to be a rush to get on boats the likes of which the industry may have never seen before.
Okay, maybe that’s a bit optimistic. But it’s hard to argue that the future looks a heck of a lot brighter today than 12 months ago.
Here are two key catalysts I’d invite investors to keep on their radar.
Business Update Extremely Bullish for CCL Stock
Okay, so back to that whole thing about pent-up demand.
It turns out the company’s already seeing a tremendous amount of demand materializing in the form of bookings. During the company’s recently-released business update, it was noted that booking volumes this past quarter were up 90% quarter-over-quarter.
But that’s not the best part.
Importantly, the company noted, “Cumulative advanced bookings for full year 2022 are ahead of a very strong 2019, despite minimal advertising or marketing.”
That’s incredibly positive news. Indeed, investors now have a forecast of what to expect for 2022. This sort of forward guidance has driven optimism to new highs. On April. 7, the day the company released its update, shares breached the $30 level for the first time since the pandemic began.
It’s hard to not get excited about this news. Indeed, 2019 was a banner year for cruise lines, and is a gold standard to be compared against. The fact that the outlook for 2022 appears to be materially better than that of 2019 ought to give this stock a huge shot in the arm.
While 2021 may still not be great, there’s additional hope that sailings could resume sooner than later.
Competitors Setting Sail
Recent news that Norwegian Cruise Lines (NYSE:NCLH) would be resuming international voyages this summer is bullish for the entire industry. Additionally, the fact that Norwegian has requested the CDC allow for U.S. cruises to resume earlier is another key factor investors in CCL stock will keep in focus.
The current date set by the CDC for conditional sailing to resume is Nov. 1 of this year. However, an earlier resumption of cruises would be another major boost for this stock.
It remains to be seen what will be done on this front. And to speculate would be inappropriate. However, given the amount of demand that exists right now as well as the pressure on the government to open things up, it’s entirely plausible this date could be moved up.
With an incredible number of jobs at stake here, it appears this could eventually turn into a political issue. Again, it’s important to keep the rose colored glasses on the shelf for a minute. However, I do think some sort of likelihood of a 2021 resumption of U.S. cruises is being priced into CCL stock at the moment.
And I don’t think that’s inappropriate.
Conclusion
Carnival remains the largest cruise line in the U.S., and will benefit the most from a reopening, whenever that occurs.
Given the amount of pent-up demand that’s ready to be unleashed on this sector, I do think a tremendous amount of optimism is in order with this stock. The fact that this demand has already materialized into bookings makes me even more bullish on this stock.
For those looking for a pandemic reopening play, CCL stock sure looks like a good one right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
