Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. However, the company is also trying to repay the debt it took on during the pandemic. It will take the company several years to get debt back down to a more comfortable level. That’s hindering its ability to grow shareholder value through dividends, share repurchases, and new investments. Although they have lots of upside potential, they also have lots of risk. Carnival has been working hard to shore up its financial foundation since it resumed cruises in the middle of 2021.
While advanced bookings are also super-strong, and management believes it will grow revenue faster than costs, investors decided to sell Carnival amid the renewed uncertainty. Carnival hit rough seas during the pandemic, forcing it to take on a boatload of debt and issue lots of stock to stay review capital markets and investments afloat. An alternative to investing directly in Carnival by purchasing shares is to consider passively investing in the company through an exchange-traded fund (ETF) that holds shares. According to ETF.com, 141 ETFs held more than 96.7 million shares of the cruise line as of mid-2023.
Wedbush analyst James Hardiman rates RCL stock at Outperform (equivalent of Buy) with a 12-month price target of $115, implying 33% upside from here. CDC guidelines have failed to provide a specific reopening date for cruise operators. Concerns that rising debt levels could negatively impact shareholder value are another hurdle. An author, teacher & investing expert with nearly two decades experience as an investment portfolio manager and chief financial officer for a real estate holding company. When deciding if you should purchase Carnival stock, it’s always a good idea to first assess your financial situation and long-term savings goals.
Measuring Cruise Lines Debt
In addition, the strengthening dollar will also lower earnings in the upcoming quarter. Meanwhile, management noted some costs may increase next year, such as dry-docking costs, labor costs, and the acquisition of three new ships. Like many travel stocks, Carnival had to navigate some rough seas during the COVID-19 pandemic. The cruise line company ceased operations for several months, which had a devastating financial impact. However, investors can use ETFS that invest in cruise lines to boost capital into the industry without posing enormous risk. As Norwegian Cruise, Carnival Corporation, and Royal Caribbean continue to await their first post-pandemic voyage, baskets of stocks are working together to keep the sector afloat in the market.
Therefore, be sure to regularly review Carnival’s performance and keep an eye on any relevant news or events that could impact the company or the broader market. Shares of Royal Caribbean have fallen 45% in 2020 as we head into the final two trading weeks of the year. Carnival and Norwegian Cruise Line have both taken a 57% hit this year. I warned you that cruise line stocks had some ugly year-to-date performances.
- That actually puts Norwegian in fifth place as far as total net assets.
- Its net loss per share shrank by 39% since last year, and improved by 60% from 2020.
- Unfortunately, Carnival isn’t going to be paying out that kind of money now.
Carnival could complete a reverse stock split to help reduce its outstanding share count. The Direxion Daily S&P 500 High Beta Bull 3X Shares goes by „HIBL” on the NYSE ARCA. It’s only been around since Nov. 2019, but this fund aims to outperform the S&P 500 High Beta index.
Carnival has undertaken several actions to improve profitability, which it expects to start achieving in the second half of 2023. Carnival anticipates delivering $8 billion in net debt reduction between 2024 and 2026, helping to reduce its interest expenses and take the pressure off its balance sheet. Cruise lines were some of the hardest hit stocks in the market during the pandemic sell-off in early 2020, but they’ve been some of the top performers since the market bottomed.
Top cruise line stocks in 2023
It may take years before the company is comfortable reinitiating its distributions, but capital gains should offset the trickle of dividends if Carnival keeps heading in the right direction. It looks like a buy at this point, especially after the recent 14% pullback from last month’s 52-week high. The three fusion markets forex broker review major cruise lines, with $74 billion of debt combined, according to Bloomberg, face incoming competition from billionaires and hotels hoping to start their own fleets. Betting on the luxury tier and existing customer loyalty bases, these new entrants will be vying for a chunk of the premium market.
The industry had gotten back on a growth trajectory in 2023, with Carnival reporting all-time highs in bookings and customer deposits in the year’s second quarter. Royal Caribbean has historically been able to command higher markups for its cruises, and this means that it will have the easiest path back to profitability when the industry starts sailing again. Every cruise line may argue that it has the most loyal customer base, but Royal Caribbean can quantify the devotion. Travel stocks in general have been bad bets for investors in 2021, and cruise line stocks are among the industry’s biggest losers. There are just three major publicly traded players, but they’re not all built the same.
Advantages of Cruise Line Stocks
Like Carnival, Royal Caribbean shares plunged during the COVID bear market. The cruise line stock dropped from around forex trading strategy: 5 ema and 8 ema $135 in February to below $20 by late March. Shares have more than quadrupled off this pandemic-era low, however.
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Like all investments, buying Carnival stock carries inherent risks. Some risks specific to the cruise industry include economic downturns, geopolitical events, and health-related concerns affecting travel demand. Once you’re done thoroughly researching Carnival, you’ll be able to determine the amount of money you’re comfortable investing in their stock. Remember, investing in individual stocks carries risks, so it’s essential not to invest more than you can afford to lose. Diversifying your portfolio with other investments can also help spread risk.
More than 80 percent of the 3X ETF goes toward financial instrument assets, but the remainder is a diverse array.
Cons to investing in cruise stocks include a long path to revenue recovery and the need to potentially raise additional capital in the meantime. Didora is projecting revenue-generating cruise services will begin again in March based on the latest CDC requirements. Between now and then, Didora said the cruise lines will continue to pile on more net debt to stay afloat. All pure-play cruise line stocks available to U.S. investors are underperforming the broader market, having provided total returns below the -12.1% total return of the Russell 1000 Index over the past 12 months. The market performance number above and all statistics in the tables below are as of Oct. 4, 2022. Below, we look at the top three cruise line stocks with the best value, fastest growth, and best performance.
No, individual investors typically buy and sell stocks through brokerage accounts. You can purchase Carnival stock through an online brokerage platform, like eToro or Interactive Brokers. Before making any investment, it’s crucial to research the company you plan to invest in thoroughly. Therefore, take the time to understand Carnival’s business model, financial performance, recent news, and any potential risks they may face. Additionally, be sure to review their annual reports, financial statements, and analyst reports to gain insights into the company’s prospects.
Each broker offers different account minimums and trading commissions, so some accounts will fit your financial situation better than others. We are seeing COVID-19 outbreaks on a lot of ships given the highly contagious nature of the omicron variant, but we’re also generally seeing fewer passenger fatalities and prolonged recoveries. It’s a sign that the safety protocols being carried out by the ships are working to a certain extent. There’s also hope that this fifth surge for the virus could be closer to the COVID-19 finish line, but we’ve seen how past recovery predictions have fallen flat. Carnival, Royal Caribbean, and Norwegian head into 2022 with uncertainties and low expectations.