Today is a very green day for a range of cruise stocks. Top cruise operators Carnival (NYSE:CCL), Royal Caribbean (NYSE:RCL) and Norwegian Cruise Line (NYSE:NCLH) all saw impressive gains. These stocks have soared 4%, 4.1% and 4.4% respectively as of this writing.
Indeed, the past few months have provided cruise stocks with a tremendous amount of volatility. The stock charts for each of these operators look much like waves, with surges and plunges following news about Covid-19 and its multiple variants.
Of late, the news has been overly bearish for major cruise lines. Concerns about the rapidly spreading omicron variant have poured cold water on the reopening thesis. What was once a hot go-to sector has become a place many investors have steered clear from.
However, today there’s some news that’s finally pointing in a positive direction. Let’s dive into what’s driving these cruise lines higher right now.
Cruise Stocks Surge Higher on Key Analyst Upgrade
Today, Stifel analyst Steven Wieczynski took a rather interesting take on the cruise sector. Specifically, in an analyst note related to Royal Caribbean, Wieczynski dubbed 2022 the “year of the cruise.”
If that title sounds bullish, it’s because it is.
The reasons behind this bullish call on cruise stocks are worth considering. Wieczynski believes that cruise operators are capitalized well enough to brave the storm of the pandemic. With further dilution out of the picture, a recovery in passenger volumes and capacity increases over time should boost the fundamentals of these cruise stocks.
Of course, this fundamentals-based bullish perspective on cruise stocks is not a view that everyone shares. After all, cruise ships have been under siege from the pandemic. It’s perhaps the hardest-hit sector of all.
Still, the addition of a recent Centers for Disease Control and Prevention (CDC) “ship color status” matrix has assauged the concerns of many passengers — and investors. Currently, there are no ships assigned a “red” status (requiring additional health measures).
Sure, many cruise ships have met the status for further CDC investigation, but a lack of specific additional regulations in the wake of omicron for all ships listed is being taken by investors as a bullish sign today. And rightfully so.
On the date of publication, Chris MacDonald 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.
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.
