RCL - The 3 Most Undervalued Cruise Stocks to Buy in July 2024
2024-07-10 06:00:00 ET
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There’s still plenty of smooth sailing ahead for some of the top cruise stocks to buy.
Carnival (NYSE: CCL ), for example, just raised its full-year earnings outlook after strong demand for cruises helped it post a surprise profit. Royal Caribbean recently boosted its full-year profit forecast as cruise demand surged, prompting price hikes.
Companies like Norwegian Cruise Lines (NYSE: NCLH ) also reported record bookings thanks to booming demand.
In addition, “The demand for cruise vacations continues to be at an all-time high, as evidenced by record bookings, record book decisions and record advanced ticket sales,” Norwegian CEO Harry Sommer said, as quoted by Fox Business .
Even better, cruise demand reached 107% of 2019 levels in 2023 , with 31.7 million passengers sailing. By 2027, that number is expected to sail to about 40 million. All of which means there’s still plenty of upside – and smooth sailing ahead for some of the top cruise stocks to buy.
Royal Caribbean ( RCL )
When I highlighted an opportunity in Royal Caribbean (NYSE: RCL ) on April 4 , I noted, “I’d use any weakness as an opportunity to buy. After all, demand isn’t slowing. And unless something catastrophic happens to the overall economy, RCL should see even smoother sailing ahead.”
At the time, it traded at around $135. Today, it’s up to $156.78, where it’s still a buy. All thanks to unstoppable demand. Helping, analysts at Citi just raised their price target on RCL to $204 from $165 with a buy rating. JPMorgan also raised its price target to $175 with an overweight rating on the stock, too.
Even analysts at Argus just raised their price target to $178 with a buy rating. The firm noted that high cruise occupancy of 107% in the first quarter points to demand recovery, which could result in stronger-than-expected revenue. The firm also expects RCL margins to improve, and for the company to launch newer ships over the next 12 months.
Carnival ( CCL )
On April 4 , I also mentioned that Carnival was a buy on weakness—and still is.
At the time, CCL traded at about $15. Today, after hitting a high of $18.92, it’s back to $17.21 and still a solid long term buy opportunity. Helping, earnings were strong. Its second quarter earnings per share of 11 cents beat by 13 cents. Revenue of $5.78 billion (up 17.7% year over year) beat by $90 million. Total customer deposits jumped to an all-time high of $8.3 billion, passing its previous record of $7.2 billion in May 2023.
Moving forward, it expects 2024 adjusted profit per share of about $1.18 , compared with its earlier forecast of 98 cents. It also forecast an adjusted profit of $1.15 per share for the third quarter. Analysts had expected a profit of $1.10.
In addition, analysts have a strong buy rating on the CCL stock with an average price target of $21.72. It’s $25 at the high end of estimates.
Norwegian Cruise Line ( NCLH )
Another one of the top cruise stocks to buy is Norwegian Cruise Line.
After rallying from a May low of about $15.50, NCLH hit a high of $18.88. Now back to $17.48, it’s a buy opportunity. For one, NCLH trades at less than growth with a price-to-earnings-growth ratio of just 0.34x. It’s also trading at less than sales with a price-to-sales ratio of 0.84x.
Two, its cruise bookings are at record levels $3.8 billion and exceeds its pre-pandemic booking record. Three, there’s been so much demand, NCLH ticket sales are up 13% year over year.
Analysts at Truist just upgraded NCLH to a buy rating with a price target of $21. The firm noted it’s “time to get back onboard NCLH” and that there is still plenty of “attractive upside potential” with the stock. Deutsche Bank, JPMorgan, Wells Fargo, Stifel, Goldman Sachs, UBS and Citi raised their price targets on NCLH, too.
Plus, company director Zillah Byng-Thorne just bought 13,360 shares for about $220,440.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. 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.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.
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