If you’ve followed the cruise industry the last year or so, you might be wondering if buying cruise company stocks is a good investment.
We’ve seen numerous incidents which have given a black eye to the industry, including the wreck of the Costa Concordia in January of 2012, to Carnival’s recent engineering problems on their ships, culminating in the Triumph breakdown and subsequent public relations disaster. (Costa is a subsidiary of Carnival Cruise Lines)
With all this negative publicity, you might think that investors are shying away from cruise line stocks and those in the know aren’t recommending these investments.
If so, you think wrong.
Some of the leading stock prognosticators, as well as public relations experts are saying the cruise industry will do just fine, and the numbers are backing up their statements. The raging bull market of the last few months hasn’t hurt either.
The four leading stocks in the US for the cruise industry are Carnival, Royal Caribbean, Disney, and Norwegian. (Disney Cruise Line is a small part of the overall Disney empire so it’s stock performance is less impacted by cruise operations.)
Just how good are these stocks performing over the last year? (All figures based on current stock figures as of closing date 03/28/13)
- Carnival (CCL) Immediately after the Concordia disaster, stock fell by nearly 13%. Profits fell by 93% in the quarter immediately following the disaster. Has ranged from a low of $30.04 to a high of $39.95. Currently at $34.30. (Impact of the Concordia disaster is not over. Although the ship and recovery were insured, numerous lawsuits remain and if an environmental disaster occurs during recovery there could be repurcussions.)
- Royal Caribbean (RCL) After dropping as low as $22.12 during the ‘cruise crisis’ that hit the industry last summer, the stock has been as high as $38.56, and at press time is at $33.22.
- Disney (DIS) Has continued to perform well with it’s theme park and movie successes. Fifty two week range was $40.88 to $57.82, and currently is near it’s yearly high at $56.80.
- Norwegian (NCLH) The ‘new kid on the block’, just underwent it’s IPO in January, raising nearly 450 million. Stock opened around $19, and has seen a high of $31.91. Currently sitting at $29.65.
Cruise line stocks have done well the past year, despite negative publicity, public apathy, etc.
But what about the future for these stocks? Analysts are looking for good things. Here’s why:
- In 2013, the worldwide cruise market will increase 4.8% from a year ago, to $36.2 billion.
- The actual number of individual cruisers will be 20.9 million, up 3.3% from 2012.
- In the wake of some of the negative publicity, cruise lines will use price points to more aggressively court business. (A large portion of their profits are made from liquor and casinos, NOT the price you pay to cruise. Disney does not offer casinos on their ships)
- New ships are pouring in rapidly. New megaships from Princess (Royal) and Norwegian (Breakaway) go into service this year. Many other lines are adding smaller ships and Viking River, the leader in European river cruising will bring an unprecedented ten new ships into operation.
Even the Wall Street Journal in a recent online broadcast spoke of a resurgent cruise ship industry.
In January, Investor Place broke down the three cruise specific stocks and gave their recommendations for investors. See their analysis.
For an up to the minute look at what these stocks are doing, ‘The Cruise Paper‘ website offers a stock ticker on it’s front page dedicated to these stocks. A simple click gives a more detailed look at each one including trends, history, etc.
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