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3 Best Cruise Stocks To Buy On Any Covid Variant Volatility

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Do not count cruise stocks. The cruise industry is expected to rebound this year and hit $57 billion in annual revenue by 2027, according to market research firm Statista.

After two very difficult years, cruise lines are cautiously optimistic for 2022 with bookings for the second half of this year at pre-pandemic levels and new drugs to contain and treat Covid-19 becoming available.

While cruise stocks remain volatile, they have moved in a positive direction over the past month and have been rising steadily since December. Analysts expect more gains to come as the industry’s recovery kicks into high gear in the months ahead.

Here are three of the best cruise stocks to buy should prices fall further or if Covid-19 variant volatility persists.

  • Carnival (New York stock market :CCA)
  • Royal Caribbean Cruises (New York stock market :RLC)
  • Norwegian cruise line (New York stock market :NCLH)

Cruise Stocks to Buy: Carnival (CCL)

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Carnival shares are up again, after gaining 28% in the past month to now trade near $23. However, CCL stock still remains nearly 30% below its 52-week high. This should give an indication of cruise line inventory volatility over the past year.

The latest share price increase is driven by growing optimism that the Doral, Fla.-based company’s business will improve further this year as we put the global pandemic behind us for good. A December update from Carnival struck a positive note for investors, with the company saying its sales hit 58% of pre-pandemic levels in the fourth quarter of 2021.

Carnival said it plans to have its entire fleet of more than 100 ships in service by this spring as it seeks to push its current volume beyond pre-pandemic levels and to new milestones. Carnival shares rose further after the company said just before the new year that it expects to turn a profit in the second quarter of 2022, and advanced bookings for the second half of 2022 and through 2023 were already to 2019 levels, before the pandemic devastated its operations.

Of course, any unexpected developments related to Covid-19 or new lockdown measures could derail Carnival’s progress. But for now, it seems to be full steam ahead for the company.

Royal Caribbean (RCL)

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Shares of Royal Caribbean also tend to rise, but not as quickly as those of Carnival. Over the past 30 days, RCL stock has risen almost 20%.

The rise comes as a bit of a surprise after notorious short seller Hindenburg Research went public with betting against the cruise line operator. In a series of tweets, Hindenburg said, “The outlook for ‘Royal Caribbean’ and the cruise industry is far gloomier than other ‘post-Covid’ hospitality and leisure stories.” Royal Caribbean’s stock price immediately fell on the news, but quickly rebounded and has been rising since mid-December.

The gains for RCL stock also come despite the cruise line canceling several of its recent sailings. Earlier in January, Royal Caribbean canceled its Spectrum of the Seas cruise after several guests came into close contact with Covid-19 and over fears of the Omicron variant of the respiratory disease.

Investors now appear to be looking beyond the pandemic and towards a resumption of Royal Caribbean operations later this year. The company said bookings for 2023 are within historic ranges and have been driven by strong and growing demand from U.S. travellers.

Cruise Stocks to Buy: Norwegian Cruise Lines (NCLH)

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Like the other stocks on this list, Norwegian Cruise Lines stocks have been rallying lately. NCLH stock is up 13% in the past month, beating the benchmark S&P 500 Index which is in negative territory so far this year.

As with other cruise lines, sentiment is improving as investors watch for bookings through the second half of this year and into 2023. Norwegian has publicly stated that it plans to have its entire fleet in service by April and expects to turn a profit in the second half of this year.

In addition to its 28 ships, Norwegian, based in Miami, Florida, also operates a separate tourism service that complements its maritime business.

Norwegian shares were boosted by the company’s latest earnings report, which benefited from some very easy comparables. The company reported third-quarter revenue of $153.08 million as its vessels returned to service during the summer months. Third quarter revenue was up 2,248% year over year (in Q3 2020 the ships were beached and the company had no actual revenue). However, Norwegian missed Wall Street’s revenue estimate by nearly $20 million.

Nonetheless, Norwegian’s business is expected to strengthen as we progress through 2022 and into next year, which should help drive the share price even higher.

As of the date of publication, Joel Baglole had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

3 Best Cruise Stocks To Buy On Any Covid Variant Volatility

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