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So far, this is paying off. After cruise inventory fell in March 2020, RCL regained most of the profit, rising nearly 86% in its recovery. Norwegian Cruise Lines (New York Stock Exchange:NCLH) is in second place with an increase of 40%, while Carnival comes in at the bottom with about 20%. When I cashed out my RCL stock in August 2021, I made a gain of about 130%.
But now there are some new variables at play. And I’m starting to think that CCL stock may now be the best cruise line game of 2022.
listen to me.
First, to invest in cruise stocks, you have to believe in the business – even if you’re not interested in taking a cruise. Before the pandemic, the Cruise Lines International Association said the number of passengers who took global cruises jumped from 17.8 million in 2009 to 30 million in 2019.
Sailing is really popular – especially with the Generation X crowd that has a lot of money to spend on cruises. And they have plenty of incentives to get out of the house after two years of lockdown.
Therefore, I am convinced that sailing will return in a big way.
Now, let’s take a look at our three cruise inventory. While RCL has had the best recovery since the start of the pandemic and CCL stock is the worst, all three names are still hit hard. The Royal Caribbean remains 54% below its pre-pandemic level. The NCLH discount is 72%, and the carnival stock is about 74% from its pre-pandemic high.
This tells me that Carnival has an upside remaining from the three cruise stocks.
Finally, there is one more reason for optimism. Carnival successfully launched its flagship, the Carnival Splendor, from the Port of Seattle earlier this month. This is noteworthy because it makes Carnival the first major cruise line to bring its entire fleet of ships back to sea since the pandemic began.
This is an achievement. And it’s also profitable, because only by making a reservation and completing cruises can cruise lines make money. And Carnival is now in the best shape for major cruise lines to do so because it has put all of its ships back in the water.
Now, I don’t think the carnival will climb to the top right away. There is a lot of pressure on stocks in general, and higher inflation and interest rates mean that some people will have less money to spend on cruise vacations.
But I’m cautiously optimistic that CCL stock is now set to go up a bit. I think it will outperform other cruise stocks over the next year or so.
At the date of publication, Patrick Sanders did not (directly or indirectly) hold any other positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, and are subject to InvestorPlace.com’s posting guidelines.