10 Most Undervalued Mid Cap Stocks to Buy According to Hedge Funds

2. Norwegian Cruise Line Holdings (NYSE:NCLH)

Forward P/E Ratio as of March 5: 10.6

Number of Hedge Fund Holders: 58

Norwegian Cruise Line Holdings (NYSE:NCLH) is a global cruise company that offers a range of vacation experiences through its Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises brands. It provides passengers with exceptional itineraries and onboard amenities across numerous international destinations.

The company’s onboard revenue segment achieved a record 10% net yield growth in 2024. Onboard revenue includes all spending by cruise passengers during their voyage, beyond the initial ticket price. This includes dining, beverages, retail, and entertainment purchases. This growth exceeded initial forecasts by 4.5%. Enhancements to the onboard guest experience, which include improved Wi-Fi and entertainment, have fueled this growth. Strategic partnerships, such as those with the NHL and Aston Martin, have also contributed.

Norwegian Cruise Line Holdings (NYSE:NCLH) continues to enhance onboard experiences through development at Great Stirrup Cay, with a new pier designed to increase passenger capacity and onboard spending. Great Stirrup Cay is the company’s private island destination in the Bahamas for exclusive beach experiences and onboard-like amenities to its passengers. Further technological advancements and the development of premium onboard offerings within luxury brands are also increasing revenue from this segment.

Ariel Small Cap Value Strategy stated the following regarding Norwegian Cruise Line Holdings (NYSE:NCLH) in its Q4 2024 investor letter:

“Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) advanced over the period following a top- and bottom-line earnings beat and subsequent raise in full-year guidance. Stronger than anticipated consumer demand, healthy onboard spending, robust pricing, solid cost containment and continued progress on leverage reduction boosted results. Looking ahead, NCLH remains focused on right sizing its cost base and improving margins to further strengthen its foundation for sustainable and profitable growth. With a young average fleet and solid liquidity position, we remain enthusiastic about the name.”