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3 Best Cruise Stocks to Buy on Any Covid Variant Volatility

cruise stocks - 3 Best Cruise Stocks to Buy on Any Covid Variant Volatility

Source: Kokoulina / Shutterstock.com

Don’t count out the cruise stocks. The cruise industry is forecast to rebound this year, and is expected to reach $57 billion in annual revenues by 2027, according to market research firm Statista.

After two very difficult years, cruise operators are cautiously optimistic about 2022 with bookings for the second half of this year at pre-pandemic levels and new medications to contain and treat Covid-19 becoming available.

While cruise stocks remain volatile, they have turned in a positive direction over the last month and been steadily rising since December. Analysts forecast more gains ahead as the industry’s recovery kicks into high gear in the coming months.

Here are three of the best cruise stocks to buy should there be another dip in prices or if Covid-19 variant volatility persists.

  • Carnival (NYSE:CCL)
  • Royal Caribbean Cruises (NYSE:RCL)
  • Norwegian Cruise Line (NYSE:NCLH)

Cruise Stocks to Buy: Carnival (CCL)

Carnival (CCL) cruise ship on water in front of beach with chairs
Source: Flickr

Shares of Carnival are again marching higher, having gained 28% over the last month to now trade at nearly $23. However, CCL stock still remains nearly 30% below its 52-week high. That should provide an indication of just how volatile stocks of cruise lines have been over the past year.

The latest increase in the share price is being driven by rising optimism that the Doral, Florida-based company’s business will improve further this year as we put the global pandemic behind us for good. A December update from Carnival sounded a positive note to investors, with the company stating that its sales grew to 58% of pre-pandemic levels in the fourth quarter of 2021.

Carnival has said that it plans to have its entire fleet of more than 100 vessels in operation by this spring as it seeks to push its current volume past pre-pandemic levels and to new milestones. Carnival shares got a further boost after the company said just prior to the new year that it forecasts posting a profit in the second quarter of 2022, and that advanced bookings for the second half of 2022 and into 2023 are already at 2019 levels, before the pandemic devastated its operations.

Of course, any unexpected developments related to Covid-19 or new lockdown measures could derail Carnival’s progress. But for now, it looks to be full steam ahead for the company.

Royal Caribbean (RCL)

Royal Caribbean (RCL) ship at sea from an overhead view
Source: ImagineStock / Shutterstock.com

Shares of Royal Caribbean are also trending higher, though not as briskly as those of Carnival. In the past 30 days, RCL stock has risen almost 20%.

The increase is a bit surprising coming as it does after notorious short seller Hindenburg Research said publicly that it has bet against the cruise line operator. In a series of tweets, Hindenburg said “The outlook for ‘Royal Caribbean’ and the cruise industry is far more grim than other hospitality and leisure ‘post-Covid’ stories.” Royal Caribbean’s share price immediately fell on the news but quickly rebounded and has been on an upswing since mid-December.

The gains in RCL stock also come despite the cruise operator canceling several of its recent sailings. Earlier in January, Royal Caribbean canceled its Spectrum of the Seas cruise after several guests came into close contact with Covid-19 and over fears related to the Omicron variant of the respiratory disease.

Investors seem to now be looking past the pandemic and to a recovery for Royal Caribbean’s operations over the course of this year. The company has said that bookings for 2023 fall within historical ranges and have been driven by strong and growing demand from American travelers.

Cruise Stocks to Buy: Norwegian Cruise Lines (NCLH)

Norwegian Pearl, a Norwegian Cruise Line (NCLH) ship, in the middle of the ocean
Source: Vytautas Kielaitis/shutterstock.com

Like the other stocks on this list, shares in Norwegian Cruise Lines are rallying lately. NCLH stock is up 13% over the past month, outpacing the benchmark S&P 500 index that is in negative territory so far this year.

As with other cruise lines, sentiment is improving as investors look out at bookings in the second half of this year and into 2023. Norwegian has publicly stated that it plans to have its entire fleet in service by April and expects to turn a profit in the second half of this year.

In addition to its 28 ships, Miami, Florida-based Norwegian also runs a separate tourism service that compliments its seagoing enterprise.

Norwegian’s stock got a boost from the company’s most recent earnings report, which benefited from some very easy comparables. The company reported third quarter revenue of $153.08 million as its ships returned to service in the summer months. The Q3 revenues were up 2,248% year-over-year (in Q3 2020 the ships were grounded and the company had no real revenue). However, Norwegian did miss Wall Street’s revenue estimate by nearly $20 million.

Still, expectations are that Norwegian’s business will strengthen as we progress through 2022 and move into next year, which should help lift the share price even higher.

On the date of publication, Joel Baglole 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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/01/3-best-cruise-stocks-to-buy-on-any-covid-variant-volatility/.

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