Ounder which stocks are hot in the market This year? Despite the proliferation of omicron COVID-19 variants, the cruise industry has rebounded remarkably well, with major cruise lines returning their full fleets to service and, in some cases, anticipating record bookings, according to the Washington Post.
What does this mean for stock investors? Keep reading to learn more about the top three cruise stocks to watch in 2022.
Overview of the cruise industry
The cruise industry consists of all business entities involved in cruise ship tourism and transportation. Cruise industry operations include cruise lines, cruise ship manufacturers, and entertainment companies specializing in cruise ship entertainment.
About Cruise Lines
A cruise line is a business that operates fleets of cruise ships and sells cruises to its customers. An all-inclusive cruise ticket will typically include:
- A cabin on board the cruise ship
- A variety of entertainment
- Stops at specified travel destinations, such as port stops
Global cruise lines represent an important part of the broader travel industry, which includes entertainment, leisure and hospitality management. For this reason, investors can see the benefits of buy stocks in booming cruise lines.
Explore the top 3 cruise ship stocks
Although cruise lines have suffered financial losses due to the Covid-19 pandemic, investors can expect a strong rebound. Here’s a look at the top three cruise line stocks based on market capitalization. As major players, they could prove to be indicators for cruise stocks as a whole.
|Cruise||Based in/operating in||Last negotiated price||Performance since the beginning of the year|
|Carnival Cruise Line (CCL)||North America, Australia, Europe, Asia||$12.93||-35.74%|
|Royal Caribbean Cruises Ltd. (RCL)||Florida||$53.83||-30.00%|
|Norwegian Cruise Line Holdings (NCLH)||Scandinavia, Western Europe, United Kingdom||$15.15||-26.95%|
Here is some information on the top three companies in the cruise industry to help you make sound investment decisions if you choose to buy cruise line stocks in 2022.
1.Carnival Cruise Line (CCL)
Carnival, the world’s largest cruise operator, offers cruises to destinations around the world. The cruise line’s Carnival Pride began sailing again in September 2021 – the first ship to sail from the Baltimore cruise terminal in 18 months. It was a big deal as the world continued to reopen.
Prioritizing public health, Carnival aims to restore consumer confidence as the driving force behind global economic recovery, travel and tourism. The company still has a strict vaccination policy in effect for European and Trans-Pacific cruises and requires pre-cruise COVID testing.
The stock has been down significantly since last June despite Carnival making good progress towards a return to profitability by the third quarter of 2022, according to The Maritime Executive, reporting on an earnings call with investors. Major markets other than China have reopened and the business is operating at 75% capacity. That number is expected to improve as Carnival tackles staffing shortages that have hampered the recovery of all cruise lines and forced the company to cancel reservations for some passengers.
2. Royal Caribbean Cruises Ltd. (RCL)
Royal Caribbean is the second largest cruise line, after Carnival, and it includes three popular subsidiary cruise lines: Royal Caribbean International, Celebrity Cruises and Silversea Cruises. Like Carnival, Royal Caribbean is emphasizing safety with vaccine and COVID testing requirements.
Prior to the pandemic, Royal Caribbean had placed orders for a number of new cruise ships, including an all-new class called Icon Class, according to the company’s blog. Although Royal Caribbean has had to reduce its lead times, passengers can still expect a number of new ships to become available over the next couple of years.
Cruise upgrades will include:
- Adjusted passenger capacity
- Additional health and safety protocols
- Adhere to government and health authority guidelines from the Healthy Sail Panel
Royal Caribbean, like other stocks, lmuch of his recent earnings to the spread of omicron. However, in last month’s first quarter results, CEO Jason Liberty said the company was seeing strong demand heading towards pre-COVID levels. He also noted that Royal Caribbean is implementing aggressive recruiting efforts to overcome staffing shortages. These shortages have prompted the cruise line to sail below full capacity at a time when capacity is already reduced. But in the long run, Royal Caribbean’s ability to adapt to changing economic conditions could cause investors to seriously consider adding RCL shares to their investment portfolio.
3. Norwegian Cruise Line Holdings (NCLH)
As the world’s third largest cruise line, Norwegian has a fleet of 17 ships that typically sail to more than 490 global destinations. By 2027, the cruise line plans to add nine ships to its inventory.
Norwegian, like its competitors, has always had COVID vaccination and testing requirements in place — a situation that is unlikely to change in the near future, TheStreet reported. This means all three cruise lines are on equal footing with passengers who prioritize COVID measures when traveling – and non-compliant people who choose alternative means of transport.
The cruise line reached an important milestone in the first quarter of the year when the last ship in its fleet resumed sailing, the company announced in a press release. It is still working to increase occupancy amid strong demand and hopes to achieve record net returns for the whole of 2023. Analysts are bullish on the stock, giving it a “buy” rating and an average price target of $25.22, according to InvestorsObserver.
What to Consider Before Investing in Cruise Stocks
People around the world are eagerly waiting to resume their cruise ship vacations. Investors might take this eagerness as a sign that the cruise industry could be a great place to invest despite economic uncertainty and ongoing challenges due to COVID.
Sophisticated investors focus on industries and companies they know, understand, and research thoroughly before buying stocks. Smart investing involves learning about companies’ business models and how they compare to other companies in the same industry.
With as much knowledge as possible about the cruise ship industry and the positioning of cruise lines, well-educated investors are one step ahead of other investors.
What’s the deal on cruise line stocks today?
Despite being one of the industries hardest hit by the pandemic, cruise line stocks could be on the verge of a rebound. The recovery so far has been uneven, however, and some of the cruise industry’s early gains have been lost as the omicron variant tempers cruise lines’ ability to keep up with demand.
Good to know
The 2021 Cruise Industry News annual report indicates that the Caribbean, Mediterranean and Asia/Pacific regions represent the three largest markets for global cruise capacity. However, a number of cruise lines have canceled Asia cruises for 2022.
As the focus on responsible tourism grows in light of the impacts of the COVID-19 pandemic, the cruise industry continues its commitment to a healthier and more prosperous future. Cruise lines Carnival, Royal Caribbean and Norwegian are making strides to return with a vengeance.
Will investors get a good return on their investment in these cruise line stocks? Time will tell us.
Daria Uhlig contributed to the reporting of this article.
Data is accurate as of June 9, 2022 and is subject to change.
This article has been updated with additional reports since its original publication.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.