Cruise Line industry after a hard-fought battle last year is going to get tested again.
The cruise line industry is a part of the broader travel and tourism industry. The main focus is to provide entertainment in the sea environment. The cruise line firms have taken a massive hit from the global pandemic. The cruise ship’s operations were off for a long period following the COVID-19 restrictions.
The industry is still a big risk for the investors. Despite we have the vaccine in the market but still the vulnerability level is quite high. The fact that the vaccine is limited and the scale of the pandemic is immense. There are nearly 25.86 million active coronavirus cases at the moment, so things are still unreliable for the cruise line industry to begin full operations in the near future.
The cruises have limited right to set sail again. Some of the industry leaders that can stand a chance for potential investment; will have look at them. Here are the three possible investment options for cruise line stocks this year.
Carnival Corp. (CCL)
Carnival Corp. (CCL) had a testing period last year—just like another cruise firm. The company was able to shrink its expenses through the removal of 19 less efficient ships, 15 of which have already left the fleet.
In the fourth quarter, the company had a net loss of $1.9 billion, while the remaining cash balance was around $9.5 billion. The company has taken some aggressive actions to keep managing the balance sheet and reducing capacity. Carnival believes that they are well-positioned to capitalize on pent-up demand—being the leading force of the industry.
In the past few days, CCL stock has continued with a strong trend, as investors respond to the firm’s initiative to support digital gambling board its Princess cruise line. The company plans to launch its new Ocean Sportsbook—a digital application under process in collaboration with Miomni Online Gaming Solutions.
Being the industry leader and with a well managed financial position, Carnival Corp. (CCL) is one to watch this year.
Royal Caribbean (RCL)
Royal Caribbean (RCL) is another promising cruise line stock that would amuse investors if they are willing to bet in the cruise line industry. Royal Caribbean is one of the most decorated cruise line firms in the market right now. Just like other counterparts, the company has faced hard times due to pandemic.
However, compared to Carnival, RCL shares price dropped almost 45% last year. While CCL shares plunged up to 58%. Royal Caribbean is about to report its Q4 results, expected to record earnings loss of $5.04 per share, as per Zacks.
Historically, the company has had a higher command mark-up for its cruises, which means RCL would have a smoother path back to profitability once the company starts sailing at its maximum.
OneSpaWorld (OSW) has been a better performing stock over the 12-months. Those investors who betted on OSW back in March would have made profits by now. Smart investors know that the drop in shares price is a massive opportunity to cash in.
With that being said, OneSpaWorld is highly dependent upon cruise line operations for its revenue and operations. In the Q3 report, the company noted that it has enough liquidity to sustain its operations through at least Dec. 2021.
Two Wall Street analysts recommend OSW as a buy. But the stock is trading in an uncertain trend since the start of this year. The best choice would be to jump in when it’s down. However, the best thing is to wait for now and watch the trend and updates of quarterly results.