3 Top Cruise Ship Stocks To Watch in 2023
Wondering which stocks are hot on the market this year? The cruise industry has rebounded remarkably well since the pandemic, with major cruise lines returning their full fleets to service, in some cases, anticipating record-breaking bookings, according to The Washington Post.
What does this mean for stock investors? Continue reading to learn about the top three cruise stocks to watch in 2023.
Overview of the Cruise Industry
The cruise industry consists of all business entities involved with tourism and transport on cruise ships. Cruise industry operations include cruise lines, cruise ship manufacturers and entertainment companies that specialize in cruise ship entertainment.
About Cruise Lines
A cruise line is a company that operates fleets of cruise ships and sells cruise experiences to customers. An all-inclusive cruise ticket will usually include:
- A stateroom aboard the cruise ship
- A variety of entertainment
- Stops at specified travel destinations, such as port stops
Global cruise lines are a major part of the larger travel industry that includes entertainment, leisure and hospitality management. Investors may see the benefits of buying stock in the rebounded cruise line companies.
Exploring the Top 3 Cruise Ship Stocks
Although cruise ship companies have suffered financial losses due to the COVID-19 pandemic and its aftermath, and the stocks are down 25% to over 50% in the last year despite consumers’ return to travel, investors can be hopeful for a strong rebound. Here’s a look at the three largest cruise line stocks based on market capitalization. As major players, they could prove to be bellwethers for cruise stocks overall.
|Cruise Line||Based In/Operates In||Last Traded Price||Performance YTD|
|Carnival Cruise Line (CCL)||North America, Australia, Europe, Asia||$10.88||+34.99%|
|Royal Caribbean Cruises Ltd. (RCL)||Florida||$64.16||+29.80%|
|Norwegian Cruise Line Holdings (NCLH)||Scandinavia, Western Europe, U.K.||$16.00||+30.72%|
Here’s some information about the three largest publicly traded companies in the cruise industry to help you make sound investment decisions if you choose to buy cruise line stocks in 2023.
1. Carnival Cruise Line (CCL)
Carnival once was the world’s largest cruise line operator and is now second to Royal Caribbean after the stock lost over half its value in 2022. It cruises to destinations all over the world. The cruise line’s Carnival Pride began sailing again in September 2021 — the first ship to set sail from the Baltimore cruise terminal in 18 months. This was a big deal as the world continued to reopen.
Prioritizing public health, Carnival aims to restore consumer confidence as a leading force in global economic recovery, travel and tourism. The company still has a strict vaccination and pre-cruise COVID-test policy in effect for cruises of 16 nights or more.
Although the stock is down 52.49% over the past year, it has seen a 34.99% gain since Jan. 1. In its business update for the fourth quarter of 2022, the company reported a net loss in earnings per share but noted earnings were within the range it had predicted despite challenges like high fuel prices and unfavorable currency exchange rates. While occupancy levels were still low compared to 2019, Carnival beat 2019 on some metrics, including revenue per passenger per day and total customer deposits. Advanced booked positions for 2023 are also higher compared to 2019. Carnival CEO Josh Weinstein said the momentum established last year continued into December and bodes well for 2023.
2. Royal Caribbean Cruises Ltd. (RCL)
Royal Caribbean includes three popular subsidiary cruise lines: Royal Caribbean International, Celebrity Cruises and Silversea Cruises. Royal Caribbean has eliminated pre-cruise COVID testing and vaccination requirements for most sailings.
Prior to the pandemic, Royal Caribbean had placed orders for a number of new cruise ships, including a brand new class called the Icon Class, according to the company’s blog. Although the company had to scale back its timelines, passengers can still cruise on two new ships: Icon of the Seas and the world’s largest ship, Wonder of the Seas.
Royal Caribbean, like other stocks, declined steeply last year. However, it reported better-than-expected earnings in the third quarter of 2022, and other metrics are improving as well. “Load factors,” a measure of the number of booked passengers compared to the number needed to break even on a sailing, reached 96% overall and surpassed 100% on Caribbean sailings, according to a press release. The company expected the figure to reach 100% or more by the end of 2022. Booking volumes were better than the third quarter of 2019 in terms of future sailings, which the company attributed to eased COVID restrictions.
To ensure its continued performance improvement, Royal Caribbean has implemented a three-year initiative. Goals the company expects to reach by 2025 include exceeding 2019 earnings and returns on invested capital.
3. Norwegian Cruise Line Holdings (NCLH)
Coming in as the third-largest cruise line in the world, Norwegian has a fleet of 18 ships that sail to more than 300 global destinations. The company planned to expand its fleet by six ships between 2022 and 2027.
Norwegian has no COVID testing or vaccination requirements, although destinations might have requirements of their own. This gives Norwegian the same edge Royal Caribbean has over Carnival, which requires vaccines and pre-cruise COVID tests for longer sailings.
The cruise line reached a major milestone during the third quarter of 2022, the most recent reported, with positive adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, for the first time since the pandemic began. Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd., noted that the cruise line’s 2023 booked position equaled 2019’s record levels despite record-high pricing. Norwegian expects historical-level occupancy by mid-2023.
What To Consider Before Investing In Cruise Stocks
People waited anxiously to resume their vacations aboard cruise ships, but even after cruise lines resumed sailing, COVID restrictions and the risk of being stuck overseas in the event of infection made many would-be travelers leery about booking. Now that most of those restrictions have been lifted and the major cruise lines are reporting strong demand, the cruise industry might be a great place to invest despite economic uncertainty and ongoing challenges due to COVID.
Savvy investors concentrate on industries and businesses that they know, so they can understand and thoroughly research before buying stock. Sound investing involves learning 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 how well the cruise lines are positioned, well-educated investors have a leg up over other investors.
What’s the Deal on Cruise Line Stocks Today?
Despite being one of the hardest-hit industries by the pandemic, cruise line stocks could be poised to rebound. Recovery thus far has been uneven, however, and the industry still faces significant challenges stemming from the pandemic.
Good To Know
The 2021 Cruise Industry News Annual Report indicates that the Caribbean, Mediterranean and Asia/Pacific regions account for the three largest markets of the world’s cruise capacity. However, a number of cruise lines canceled Asia cruises for 2022.
As the focus on responsible tourism gains momentum in light of the impacts of the COVID-19 pandemic, the cruise industry continues its commitment to a healthier and prosperous future. Carnival, Royal Caribbean and Norwegian cruise lines are making strides to come back with a vengeance.
Will investors get a good return on their investment in these cruise line stocks? Time will tell.
Daria Uhlig contributed to the reporting for this article.
Data is accurate as of Jan. 18, 2023, and is subject to change.
This article has been updated with additional reporting since its original publication.
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- The Washington Post. 2022. "Cruises are smashing records despite covid on board: ‘Life goes on.’"
- The Maritime Executive. 2022. "Carnival Projects Full Fleet Operations and Return to Profitability."