Tag: NCLH

Riding the Waves: Investing in Cruise Line Stocks for Growth

Investing in the stock market can be rewarding but challenging. Among the various sectors available, cruise line stocks have emerged as an intriguing option for many investors. With the world gradually recovering from the economic impacts of the pandemic, the cruise industry has been poised for a significant resurgence. Let’s dive into why cruise line stocks could be a smart addition to your investment portfolio.

Reasons to Invest in Cruise Line Stocks

1. Strong Rebound Potential

The cruise industry, like many others in the travel and tourism sector, was heavily impacted by the COVID-19 pandemic. However, as travel restrictions ease, the demand for cruising is expected to surge. Many cruise lines have reported a strong uptick in bookings for upcoming seasons. This rebound potential offers investors the opportunity to capitalize on the industry’s growth from its current undervalued state.

2. Diversified Revenue Streams

Cruise lines generate revenue from a variety of sources, including ticket sales, onboard spending, and excursions. This diversification helps mitigate risks associated with any single revenue stream. Cruise lines have been innovative in creating new revenue opportunities, such as premium dining experiences, exclusive shore excursions, and enhanced onboard entertainment options. This ability to diversify and innovate revenue streams positions cruise lines for sustained financial health and growth.

3. Strategic Cost Management and Expansion Plans

Many cruise lines have utilized the downtime during the pandemic to streamline operations and reduce costs. These cost-cutting measures, combined with strategic expansion plans, such as the introduction of new ships and itineraries, are set to enhance profitability as the industry recovers. Additionally, the industry’s focus on sustainability and adopting greener technologies could attract environmentally conscious investors, further boosting stock performance.

Listed below are the top four cruise line stocks:

  1. Norwegian Cruise Line Holdings Ltd. (NCLH) known for its premium brands—Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises—the company has built a loyal customer base that drives repeat business. Additionally, the company’s strategic initiatives, including cost management and the introduction of new, more efficient ships, are set to enhance profitability. These factors, combined with a focus on sustainability and innovation, make NCLH an attractive choice for investors looking to benefit from the anticipated resurgence in the travel and leisure sector.
  • Carnival Corporation & plc (CCL) Known as the world’s largest cruise company, with a diverse portfolio of brands including Carnival Cruise Line, Princess Cruises, and Holland America Line. The company’s extensive global reach and strong brand recognition position it well to capitalize on the rebound in travel demand as pandemic restrictions ease. CCL has implemented significant cost-saving measures and has invested in new, more efficient ships. Additionally, its focus on sustainability and innovative customer experiences, and strategic growth initiatives, make CCL a strong candidate for investors seeking to benefit from the recovery and growth of the cruise industry.
  • Royal Caribbean Group (RCL) is an attractive investment due to its status as a leading global cruise operator with renowned brands such as Royal Caribbean International, Celebrity Cruises, and Silversea Cruises. The company’s reputation for innovation, exemplified by its state-of-the-art ships and unique onboard experiences. RCL’s strategic initiatives, including cost efficiencies and fleet modernization with more sustainable and fuel-efficient vessels, positions itself with a strong financial outlook. 
  • Lindblad Expeditions Holdings, Inc. (LIND) has a niche focus on adventure and ecotourism, offering unique expedition experiences through its partnership with National Geographic. This strategic alignment allows LIND to cater to a growing market of environmentally conscious travelers seeking immersive and educational travel experiences. The company’s strong brand recognition and loyal customer base, combined with a fleet of specialized expedition ships, position it well to capitalize on the increasing demand for sustainable travel. 
CompanyCompany SymbolPrice to BookPEGPEPrice to SalesForward PEYield
Norwegian Cruise Line Holdings LtdNCLH20.490.5426.490.839.380.00%
Carnival Corp.CCL3.05NA62.530.911.050.00%
Royal Caribbean Cruises Ltd.RCL7.550.6619.812.6411.822.02%
Lindblad Expeditions Holdings IncLINDNANANA0.70NA0.00%

The cruise line industry presents a compelling investment opportunity due to its strong rebound potential, diversified revenue streams, and strategic cost management and expansion plans. As the world returns to normalcy, cruise line stocks are well-positioned to deliver significant returns to savvy investors.

Disclosure: Author has a short position in RCL.

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Top Travel Stocks Short Squeeze Plays

by Fred Fuld III

Many stocks in the travel industry have suffered during the last three years due to the COVID pandemic. Some have lost over 50% of their value since 2019. As the market prices for these stocks have dropped so much, now might be the time to look for short squeeze opportunities.

Here is a quick review about the short squeeze and its terminology. When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics, but they have very low market caps and floats.

Company Symbol Days to Cover % of Float Shorted
Carnival Corporation & plc CCL 2 10%
Expedia Group, Inc. EXPE 2.9 5%
Lindblad Expeditions Holdings, Inc. LIND 23.9 19%
Norwegian Cruise Line Holdings Ltd. NCLH 1.6 10%
Royal Caribbean Cruises Ltd. RCL 2.9 6%
TripAdvisor, Inc. TRIP 4 12%

So as an example, Carnival has 10% of the float shorted, and it will take two days for the short sellers to cover their positions, based on the average daily volume.

Obviously, there is no guarantee that these stocks will go up, but if I was short any stock, I wouldn’t want to waste any time covering my position if the stock started to move up sharply, before all the other short sellers clamor in and drive the price way up.

Disclosure: Author has a short and long option position in CCL.

Why Were Cruise Lines Even Under Consideration for a Bailout?

Last month, there was a lot of discussion about which American companies were suffering the most, and which ones should receive a bailout. One industry that was mentioned was the cruise line industry. Why?

Royal CaribbeanCruises (RCL) is a Liberian company. Its ships are. registered in the Bahamas and Malta. Oh yeah, and the company doesn’t pay Federal corporate income taxes.

Carnival (CCL) is a Panama company. The company’s ships are registered in the Bahamas and Panama. No Federal income taxes.

Norwegian Cruise Line (NCLH) os a Bermuda company with its ships registered in the Bahamas.

So why were these companies even under consideration for bailout loans? Was the U.S. Government going to bailout every major company around the world? Was the American taxpayer going to bailout Deutsche Bank (DB)? Alibaba (BABA)? Tata Motors (TTM)? Or how about Lloyds Bank (LYG)?

Anyway, the government came to its senses and has decided not to force the American taxpayer to bail out the floating petri dishes.

Disclosure: Author has option positions in RCL and CCL.

Cruising for Cruise Stocks

by Fred Fuld III

January through March is generally the busiest time of the year for reservations on cruise lines, since it is the best time of year for vacationers to plan their spring and summer cruise vacations. And if you are a shareholder, you can get lots of complementary onboard credits.

There are just a few opportunities to climb on board with cruise stocks. Hopefully they won’t sink or experience choppiness, but will be smooth sailing for investors. Here they are:

Carnival Corp. (CCL)

Carnival is one of the largest cruise and vacation companies in the world. Their cruise lines which operate out of North America, the United Kingdom, Germany and Italy, include Carnival Cruise Lines, Holland America Line, Princess Cruises, Seabourn Cruise Line and Windstar Cruises in North America; AIDA in Germany; Costa Cruises in southern Europe; P&O Cruises, Cunard Line, Ocean Village and Swan Hellenic in the United Kingdom; and P&O Cruises in Australia. They are headquartered in Miami, Florida and London, England. The stock trades at 12.9 times trailing earnings and 11.5 times forward earnings. It pays a decent yield of 3.55%.

Carnival plc (CUK)

This is the ADR for the Carnival stock which trades on the London Exchange. An explanation is necessary. Carnival Corporation & Carnival plc operates under a dual listed company structure in which Carnival Corporation and Carnival plc operate as a single economic entity through contractual agreements between each of their own separate legal entities. Shareholders of both Carnival Corporation and Carnival plc have the same voting participation and economic interest but their shares are listed on different stock exchanges and are not fungible. [Is this as clear as dirty water?]

Carnival Corporation common stock is traded on the New York Stock Exchange under the symbol CCL. Carnival plc is traded on the London Stock Exchange under the symbol CCL and as an ADS on the New York Stock Exchange under the symbol CUK.

Carnival is the only company in the world to be included in both the S& P 500 index in the US and the FTSE 100 index in the UK. If you look at the graphs for the Corp. and the plc stocks, they match almost perfectly

Royal Caribbean Cruises Ltd. (RCL)

This company owns Royal Caribbean International and Celebrity Cruises. It also owns Pullmantur S.A., which has ships in Europe and Latin America. The company also offers land tour vacations in Alaska, Canada and Europe. It is headquartered in Miami, Florida. The stock has a trailing P/E 13.4 and a forward P/E or 11.3. It has a yield of 2.5%.

Norwegian Cruise Line (NCLH)

This company operates the Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises brands. The stock trades at 12.2 times trailing earnings and 9.5 times forward earnings.

Author did not own any of the above at the time the article was written.

Cruise Line Shareholders Get Free Onboard Credit

by Fred Fuld III

It’s summer. Time for vacations. Many travelers are going on cruises. Fortunately, there’s a way to get a nice bonus on the cruise, free onboard credit up to $250. The only catch is that you need to be a shareholder of the cruise line, and own at least 100 shares.

For example, Carnival (CCL), which owns Carnival Cruise Lines and Holland America, is one of the companies offering free credit to shareholders of 100 shares or more. Here is what they offer:

  • Onboard credit per stateroom on sailings of 14 days or longer US $250
  • Onboard credit per stateroom on sailings of 7 to 13 days US $100
  • Onboard credit per stateroom on sailings of 6 days or less US $ 50

Carnival, which trades on the New York Stock Exchange,  has a price to earnings ratio of 17.5 and a forward P/E of 14.4, with a price to sales ratio of 2.56. It pays a decent yield of 2.83%.

Norwegian Cruise Line Holdings (NCLH), which trades on NASDAQ, offers shareholders the following:

  • $250 Onboard Credit per Stateroom on Sailings of 15 Days or More.
  • $100 Onboard Credit per Stateroom on Sailings of 7 to 14 Days.
  • $50 Onboard Credit per Stateroom on Sailings of 6 Days or Less.

Norwegian trades at 14.9 times trailing earnings and 11.0 times forward earnings. The price sales ratio is 2.15, and the company does not pay a dividend.

Finally, Royal Caribbean Cruises (RCL), operator of the Royal Caribbean International, Celebrity Cruises, and Azamara Club Cruises, is the second largest cruise line operator after Carnival. It offers onboard credits of:

  • $250 Onboard Credit per Stateroom on Sailings of 14 or more nights.
  • $200 Onboard Credit per Stateroom on Sailings of 10 to 13 nights.
  • $100 Onboard Credit per Stateroom on Sailings of 6 to 9 nights.
  • $50 Onboard Credit per Stateroom on Sailings of 5 nights or less.

RCL has a PE of 14.6, a forward PE of 12.5, and a PS ratio of 2.73. The yield is a favorable 2.15%.

Just keep in mind that just because a cruise line company offers onboard credits, does not mean that the stock is a good investment. Nor should you buy shares in the stock just to get the free credit. However, maybe your ship will come in with one of these stocks.

Disclosure: Author didn’t own any  of the above at the time the article was written.