Wondering which stocks are hot on 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-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 2022.
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. For this reason, investors may see the benefits of buying stock in the rebounding cruise line companies.
Exploring the Top 3 Cruise Ship Stocks
Although cruise ship companies have suffered financial losses due to the COVID-19 pandemic, 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||$12.93||-35.74%|
|Royal Caribbean Cruises Ltd. (RCL)||Florida||$53.83||-30.00%|
|Norwegian Cruise Line Holdings (NCLH)||Scandinavia, Western Europe, U.K.||$15.15||-26.95%|
Here’s some information about the three major 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 line operator, 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 policy in effect for European and transpacific cruises and requires pre-cruise COVID tests.
The stock is down significantly since last June despite Carnival making good headway toward 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 company is operating at 75% capacity. That figure should improve as Carnival tackles the staffing shortages that have hindered recovery across all the cruise lines and forced the company to cancel some passengers’ reservations.
2. Royal Caribbean Cruises Ltd. (RCL)
Royal Caribbean is the second largest in cruise line operations, 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 a brand new class called the Icon Class, according to the company’s blog. Although Royal Caribbean has had to scale back its timelines, passengers can still expect a number of new ships to come available over the next year or two.
Cruising enhancements will include:
- Adjusted passenger capacity
- Additional health and safety protocols
- Adhering to government and health authority guidance from the Healthy Sail Panel
Royal Caribbean, like other stocks, lost much of its recent gains to the spread of omicron. However, in the first-quarter earnings last month, CEO Jason Liberty said the company is seeing strong demand that’s moving toward pre-COVID levels. He also noted that Royal Caribbean is implementing aggressive hiring efforts to overcome staffing shortages. Those shortages have prompted the cruise line to sail at less than full capacity at a time when capacity is already reduced. But over the long term, Royal Caribbean’s ability to adjust to changing economic conditions could prompt investors to seriously consider adding RCL stock to their investment portfolio.
3. Norwegian Cruise Line Holdings (NCLH)
Coming in as the third-largest cruise line in the world, 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, still has COVID vaccination and testing requirements in place — a situation unlikely to change in the near future, TheStreet reported. This means all three cruise lines stand on equal footing with passengers who prioritize COVID measures when traveling — and noncompliant individuals who choose alternative means of travel.
The cruise line reached a major milestone during the first quarter of the year when the last ship in its fleet resumed sailing, the company announced in a press release. It’s still working on ramping up occupancy amid high demand and hopes to achieve record net yields for the full year 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 worldwide have been waiting anxiously to resume their vacations aboard cruise ships. Investors could consider this eagerness a sign that 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, 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 some of the cruise industry’s early gains have been lost as the omicron variant tempers the cruise lines’ ability to meet demand.
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 have 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 June 9, 2022, and is subject to change.
This article has been updated with additional reporting since its original publication.