In this article, we will be looking at the 10 best cruise stocks to buy right now. To skip our analysis of the cruise industry and its growth prospects, go directly to 5 Best Cruise Stocks To Buy Right Now.
The stocks of cruise line companies took a heavy beating during 2020 due to the COVID-19 pandemic and its subsequent variants. The suspension of cruise operations had a far-reaching impact on the service providers, travel agents, tour operators, and other stakeholders in the cruise industry. According to a report by the Cruise Lines International Association, jobs provided by the cruise industry declined from 1.17 million in 2019 to 576,000 in 2020, reflecting a decline of 51%. Overall, the industry’s economic contribution saw a decrease of 59%, from $1.54 billion in 2019 to $634 million in 2020.
However, the cruise industry has demonstrated resilience over the years and is expected to make a recovery. In December 2021, Cruise Lines International Association (CLIA) reported that the fleets of cruise line companies are working at 75% capacity with expectations that those fleets will return to full capacity by the end of July 2022. Meanwhile, the number of global passengers is expected to return to 95% of the pre-COVID level during this year. In 2021, the global number of passengers for cruise lines stood at 17 million. The number is expected to rocket to 95 million by the end of 2022.
The reason for the significant growth is a strong consumer base that has been waiting to travel on the seas for the last two years. Furthermore, the research by CLIA has also revealed that 80% of travelers are interested in traveling again for a sea-based vacation experience. Cruise companies are claiming that bookings have returned to comparable 2019 levels in the last two months.
Full Recovery Projected
By the end of 2023, CLIA’s baseline prediction forecasts that passenger volume will rebound and exceed 2019 levels. While, in the upside estimate, the passenger traffic is forecasted to return to 101% of 2019 levels by the end of this year. By 2026, passenger volume is expected to increase by more than 12% over 2019 levels in all the estimates.
Cruise vacations fall heavily on the discretionary side of the consumer spending spectrum. The Center for Disease Control and Prevention (CDC) increased its travel warning for cruise lines to the highest level in December 2021 following the outbreak of the Omicron variant. However, the federal authority lowered the risk level from very high (level 4) to high (level 3) in February 2022, then to moderate (level 2) in mid-March before lifting it by the end of the month. Cruise companies have now started to remove pre-cruise COVID-19 testing requirements for passengers but are ensuring that all passengers above the age of 12 are fully vaccinated.
Sustainable Tourism
The cruise industry is also pursuing its target of achieving carbon neutrality by 2050. The CLIA member fleet intends to have 26 LNG-powered cruise ships at the end of 2027, reflecting 16% of the global capacity. Moreover, 174 cruise ships will be provided with shoreside power connectivity, and Advanced Wastewater Treatment Systems will be installed in 231 ships, which will be reflective of 81% of global capacity. Stocks such as Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH), Royal Caribbean Cruises Ltd. (NYSE:RCL), and The Walt Disney Company (NYSE:DIS) are among the notable names in the cruise industry.
Photo by Stephanie Klepacki on Unsplash
Our Methodology
Let’s begin our list of the 10 best cruise stocks to buy right now. We have considered the growth drivers, analyst ratings, and historical performances of these companies. Furthermore, the hedge fund sentiment, based on the 912 funds tracked by Insider Monkey that filed 13Fs for the Q1 2022 reporting period, has also been discussed.
10 Best Cruise Stocks To Buy Right Now
10. Viking Line ABP (HEL:VIK1V)
Viking Line ABP (HEL:VIK1V) is a Finnish shipping company providing passengers and freight transportation services through its fleet of ferries and cruise ferries. The company offers its freight transportation services across the Aland Islands, Finland, and Sweden.
Viking Line ABP (HEL:VIK1V) reported an increase of 226.3% in passenger-related revenue in the first quarter of 2022. Furthermore, Viking Line ABP’s (HEL:VIK1V) cargo revenue also rose from €9.6 million to €10.9 million in Q1. The company is making investments into Viking Glory, a modern cruise ferry, and dry-dockings. Viking Line ABP’s (HEL:VIK1V) total investments are representative of 16.7% of the company’s total sales. The company appears to be in a strong position to expand its operations and generate greater shareholder value in the long term.
9. Hapag-Lloyd Aktiengesellschaft (OTCMKTS:HPGLY)
Hapag-Lloyd Aktiengesellschaft (OTCMKTS:HPGLY) is a Hamburg, Germany-based shipping and container transportation company. The company has a cruise division with five ships in its fleet, all of which are currently in service and providing trips ranging from two days to 19 days. The cruise company covers the Middle East, the Antarctic, the Western Mediterranean region, and many others.
During Q1 2022, Hapag-Lloyd Aktiengesellschaft (OTCMKTS:HPGLY) saw its revenue increase by 96.1% YoY to €7.98 billion. Meanwhile, GAAP EPS was posted at €23.71. The EUROPA is a state-of-the-art ship that can travel on global routes due to its size and has a crew-to-passengers ratio of almost 1-to-1. Hapag-Lloyd Aktiengesellschaft (OTCMKTS:HPGLY) shares offer a dividend yield of 13.18% as of July 13. Hapag-Lloyd Aktiengesellschaft (OTCMKTS:HPGLY) is also hedged against spot rate decline due to its long-term contracts, which make up 50% of the company’s business. This will ensure that the company’s earnings are not adversely impacted in the future.
8. TUI AG (OTCMKTS:TUIFF)
TUI AG (OTCMKTS:TUIFF) is a Hanover, Germany-based leading travel and tourism holding corporation.
TUI AG cruises is a subsidiary of the company that has a 50-50 joint venture with Royal Caribbean Cruises Lt. (NYSE:RCL). TUI AG (OTCMKTS:TUIFF), founded in 2008, has seven cruise liners in service and caters to the demands of the elite through three brands. Meanwhile, its two other brands have nine vessels combined in service.
TUI AG (OTCMKTS:TUIFF) is making a shift toward adding liquefied natural gas (LNG) powered ships to its fleet to reduce its carbon presence. On June 22, a steel cutting ceremony was held for these ships at a facility that is working on behalf of Italian ship-making giant Fincantieri. It’s intended that the 160,000 ton ship will become emission-free while parked at the port.
7. OneSpaWorld Holdings Limited (NASDAQ:OSW)
Number of Hedge Fund Holders: 9
OneSpaWorld Holdings Limited (NASDAQ:OSW) is a Bahamas-based operator of health and wellness centers on cruise ships and destination resorts globally.
OneSpaWorld Holdings Limited (NASDAQ:OSW) reported better-than-expected Q1 2022 results on May 4. Revenue increased by 1,468.2% YoY to $87.66 million and outperformed consensus estimates of $84.77 million. That was the fifth-consecutive quarter that the company has experienced sequential revenue growth. OneSpaWorld Holdings Limited (NASDAQ:OSW) finished the quarter with $30.9 million in cash and a credit facility of $13 million. The company burned through $1.9 million during the quarter as opposed to the previous guidance of $2 million to $3 million as shared in its Q4 2021 results.
As of Q1 2022, OneSpaWorld Holdings Limited (NASDAQ:OSW) was held by 9 hedge funds.
6. Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND)
Number of Hedge Fund Holders: 10
Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND) is a New York-based conventional cruise operator.
On May 17, Chris Woronka at Deutsche Bank gave Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND) a ‘Hold’ rating with a target price of $14. The analyst highlighted that management’s commentary on the pace of bookings had a bullish tone during the Q1 FY22 earnings call. However, investors are concerned about how high inflationary pressures will impact bookings.
Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND) has the advantage of being uniquely positioned in the cruise industry, given its focus on adventure tourism. Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND) is anticipated to experience growth in the short term after adding another ship to its fleet and introducing new land-based locations. Woronka concluded that Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND) offers further growth potential because of its ability to effectively go through an acquisition with significant synergies.
At the end of Q1 2022, Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND) was held by 10 hedge funds. In addition to Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND), cruise stocks such as Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH), Royal Caribbean Cruises Ltd. (NYSE:RCL), and The Walt Disney Company (NYSE:DIS) are attracting hedge fund investment as of Q1 2022.
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Disclose. None. 10 Best Cruise Stocks To Buy Right Now is originally published on Insider Monkey.
