Time flies, doesn’t it? It’s been over a year and a half since the onset of the Covid-19 pandemic. Yet cruise operator Carnival (NYSE:CCL) still hasn’t fully recovered – and neither has CCL stock, for that matter.
In fact, the share price is still 50% lower than where it was in early January of 2020. Does this imply that Carnival’s shares could eventually double?
The stock could potentially deliver strong returns. That being said, the loyal, longtime owners of CCL stock will need to remain patient, as the cruise-line industry is still finding its footing. Yet there is evidence of progress.
Carnival is celebrating a number of recent milestones – and before you know it, the tide might turn in its shareholders’ favor.
A Closer Look at CCL Stock
On Jan. 13, 2020, CCL stock was sitting pretty at around $52. I doubt that many people fully appreciated the magnitude of the calamity that was about to ensue. While the stock’s recovery has been slow, it’s also been steady. After capsizing to $8 and change, the share price had doubled by the end of 2020 and today exceeds $20.
So $50 could be a long-term price target for the stock holders. If they’re really ambitious, the investors could set their sights on the shares’ $70 peak which was reached in early 2018. At the same time, let’s acknowledge the challenges that lie ahead for the company. On a trailing 12-month basis, Carnival’s earnings per share were -$8.51, which isn’t ideal.
Getting back to profitability can’t be achieved overnight. With that in mind, let’s check the forecast for the cruise market. Will it encounter choppy waters or will it be smooth sailing for the sector for the remainder of 2021?
A Late-Year Cruise Revival?
One might assume that peak cruise season would always take place during the summer months. In 2021, however, that might not necessarily be the case. Indeed, a recent Washington Post article declared in a large-font headline, “Peak Caribbean cruise season is coming.”
This makes sense, as a cold winter may prompt travelers to sail to warmer climates. Yet there’s more to the story. According to the Centers for Disease Control and Prevention (via the Washington Post), 81 vessels are operating or planning to operate in U.S. waters.
This suggests that cruise companies are returning more of their fleets to service now. That represents a shift in sentiment compared to the summer of 2021, when the Covid-19’s Delta variant put a damper on some travelers’ plans.
Moreover, the Cruise Lines International Association expects nearly 80% of ocean-going capacity to be in operation by the end of 2022. So just maybe we’ll see a pickup in cruise activity as 2021 embarks upon its final two months, followed by even more improvement in the coming year.
Getting Back on Course
As you would expect, Carnival is more than happy to capitalize on the industrywide return to semi-normalcy. Reportedly, the cruise operator plans to have 17 of its ships back in full service by the end of 2021.
Plus, Carnival expects to see additional ships returning in January and February, and it predicts that its entire U.S. fleet will be transporting guests by the spring of 2022. The company has come a long way since Carnival’s restart, which began on July 3, 2021, when Carnival Vista set sail from Galveston. Texas.
Since then, a milestone was achieved as ten additional Carnival ships have resumed service. Amazingly, those ships have carried 237,000 guests from their home ports along the East and West Coasts and the Gulf of Mexico.
Marking the milestone, Carnival Cruise Line President Christine Duffy took the opportunity to engage in some well-earned bragging on behalf of her company.
“Our first three months back in service has underscored our strong brand loyalty, the best customer base in the cruise industry and our team’s ability to deliver outstanding results and guest service,” Duffy proclaimed.
The Bottom Line
A winter revival for the cruise industry might not seem normal. But then, few things in life and in business have been normal since the onset of Covid-19. Today cruise lines are adapting and, slowly but surely, getting their ships out to sea again.
In light of all this, it may be time to consider taking a bullish position in CCL stock. Just be sure to make room for volatility in your itinerary, as the trip will surely be replete with surprises, both good and bad.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.