It’s been smooth sailing for the cruise industry – creating a big opportunity for some of the top cruise stocks to buy.
For one, as I said just days ago, companies like Norwegian Cruise Lines (NYSE:NCLH) report record bookings thanks to booming demand. Carnival (NYSE:CCL) says it’s “capturing more guests than ever before.” Royal Caribbean (NYSE:RCL) is hiring thousands to staff its ships and private destinations to meet demand.
Two, according to JPMorgan, the cruise industry could capture 3.8% of the $1.9 trillion global vacation market by 2028 – which may be lowballing it. The firm notes the number of cruise passengers could grow to about 35.7 million this year, which is 6% higher than in 2019.
“Cruise operators are overhauling their offerings in order to appeal to consumers. Key operators are investing in new hardware, notably mega-ships and private destinations. This is driving more eyeballs to the industry, accelerating new-to-cruise acquisition,” they added.
Three, boats are being filled fast. “We’re getting close to the point where we’ll soon be taking more bookings for ’25 than we are for 2024,” Royal Caribbean Group CEO Jason Liberty told investors during a late-April earnings call, adding the company is also taking bookings for 2026.
That being said, it just makes sense to invest in cruise stocks, including:
Royal Caribbean (RCL)
The last time I highlighted an opportunity in Royal Caribbean, I said, “It’s just starting to bounce from support at $145, where it’s still a buy. Near term, I’d like to see RCL initially retest its prior high of $157.50, which shouldn’t be a problem with surging cruise bookings.”
At the time, RCL traded at around $149. Now at $154.41, it’s still a buy as it pivots higher.
Earnings have also been solid, as expected. Adjusted earnings per share of $1.77 beat estimates by $0.46. Revenue of $3.73 billion – up 29.2% year over year – beat by $38.9 million. It also hiked its EPS guidance to a new range of $2.65 to $2.75 compared to estimates of $2.37.
JPMorgan also raised its price target on RCL to $175 with an overweight rating. Analysts at Argus also raised their price target on RCL to $172 with a buy rating. All thanks to its optimism over the company’s financial prospects following a spike in occupancy rates.
Carnival (CCL)
Recent weakness cruise stocks to buy, like Carnival, is another hot opportunity.
With stronger demand and higher occupancy rates, Carnival numbers have been solid.
In its first quarter, revenue hit a record first-quarter high of $5.4 billion. Deposits jumped to $7 billion in the quarter. Adjusted EBITDA more than doubled year over year to $871 million. Even its loss per share narrowed from $0.55 last year to $0.17. Moving forward, I expect for numbers to sail even higher with explosive, growing demand for cruise vacations.
In its second quarter earnings report – out this morning – the company’s EPS of 11 cents beat by 13 cents. Revenue of $5.78 billion, up 17.7% year over year beat by $90 million. Total customer deposits for the quarter came in at $8.3 billion (an all-time high). The company also raised its forecast thanks to strong demand.
In fact, it now expects 2024 adjusted profit per share of about $1.18, compared with its earlier forecast of 98 cents. It also forecast an adjusted profit of $1.15 per share for the third quarter. Analysts had expected a profit of $1.10.
Norwegian Cruise Line (NCLH)
Another one of the top cruise stocks to buy on weakness is Norwegian Cruise Line. After gapping from about $18 to $16.18, NCLH is just starting to pivot higher. Last trading at $17.40, I’d like to see it initially retest $18.50 again shortly.
Helping, analysts at Truist just upgraded NCLH to a buy rating with a price target of $21. The firm noted it’s “time to get back onboard NCLH” and that there is still plenty of “attractive upside potential” with the stock.
Deutsche Bank, JPMorgan, Wells Fargo, Stifel, Goldman Sachs, UBS and Citi raised their price targets on NCLH, too. Plus, company director Zillah Byng-Thorne just bought 13,360 shares for about $220,440. Even Jim Simons’ Renaissance Technologies fund recently picked up 252,900 shares of NCLH at the end of March.
Again, just as we’ve said with Carnival and Royal Caribbean, use weakness as an opportunity. With greater demand for cruises, it should be smooth sailing ahead for these companies.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
