The best cruise stocks are navigating a sea of opportunity as the sector continues its emphatic recovery from pandemic lows.
Cruise liners, especially the market forerunners, have done an exceptional job of returning from the pandemic nightmare. Over the past few years, we’ve seen a marked increase in bookings and consumer demand for travel and leisure. Consequently, this uptick in demand has been driven by aggressive expansion strategies and the launch of new ships while diversifying routes to capture a much wider audience.
Additionally, companies are layering advanced technologies into their operations, adding to guest experiences and operational efficiencies. Some of these innovations include AI-driven personalization and adopting eco-friendly practices, which appeal to the younger demographic.
Furthermore, the best cruise stocks highlighted in the article have shown remarkable financial performance, with impressive top-and-bottom line numbers in recent quarters. This superb financial standing positions them not just as recovery plays but as dynamic investment prospects ahead of the interest rate cuts.
Best Cruise Stocks To Buy: Royal Caribbean (RCL)
Royal Caribbean (NYSE:RCL) is the best-performing cruise stock on the list. Despite trading almost 20% behind its 52-week highs, RCL stock has surged 51% in the past nine months, leaving its peers in the dust. Much of its success is linked to its stellar performances, consistently delivering four positive earnings surprises (>2% growth), with an 18% average surprise.
It recently posted its second-quarter (Q2) results, buoyed by robust demand for its vacation experiences. The tremendous momentum in onboard spending drove revenues up 16.8% year-over-year (YOY) to $4.11 billion, beating estimates by $60 million. Additionally, adjusted net income nearly doubled to $882 million from $492 million in the prior year, with EPS hitting $3.21, beating the $2.75 consensus.
As we advance, it expects its EPS to fall in the $11.35 to $11.45 range this year, outpacing consensus estimates of $11.09. Additionally, expected net yield growth of 10.4% to 10.9% and its reinstatement of a 40 cent per share dividend reflects a confident outlook.
Carnival (CCL)
Carnival (NYSE:CCL) is another premier cruise stock offering a healthy long-term upside. Unlike RCL, though, CCL stock has been relatively sluggish over the past nine months, rising by 15%. However, over the past six months, it’s down more than 9%.
Nevertheless, on a fundamental level, CCL’s bull-case remains as powerful as ever. It beat analyst estimates across both lines with ease across both lines. Its latest Q2 performance was arguably its finest, hitting record highs in customer deposits. To put things in perspective, the record-high $8.3 billion in customer deposits was 232% higher than in Q2 2021.
Consequently, the firm’s bottom-line numbers have risen dramatically, with its trailing-twelve-month (TTM) EPS of 71 cents beating its 2020 figure by a 105%. Also, CCL boasts record bookings for 2025, signaling strong future demand. Unsurprisingly, analysts at JPMorgan raised its price target on CCL to $25, pointing to a 73% upside from current levels.
Norwegian Cruise Line Holdings (NCLH)
Norwegian Cruise Line Holdings (NYSE:NCLH) is another giant in the cruise industry with the most attractive valuation on the list. It racked up a ton of debt to maintain its operations during the pandemic, and the heightened interest rates nibbled away at its profits. However, recent results have shown a marked improvement, with its TTM EPS at 98 cents, a 106% improvement from its 2020 figure. Additionally, its 1-year long-term debt growth rate is at a negative 0.7%, compared to an 18.5% increase over the past five years.
Despite the headwinds, Norwegian is primed for a significant rebound over the next year. Its robust Q2 results showed an 8% jump in sales to $2.4 billion and adjusted earnings per share at 40 cents, beating estimates by 23%. Both segments fuel recovery across top-and-bottom lines, with major improvements anticipated as debt servicing costs drop.
Moreover, as per consensus analyst estimates, NCLH stock is trading at a 35% discount to its intrinsic value.
On the date of publication, Muslim Farooque 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
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.