10 Worst Cruise Stocks to Buy Now According to Short Sellers

2) Carnival Corporation & plc (NYSE:CCL)

Short % of Float (As of 15 August): 9.46%

Number of Hedge Fund Holders: 53

Carnival Corporation & plc (NYSE:CCL) owns and operates cruise ships providing cruises to all major vacation destinations such as North America, United Kingdom, Germany, Southern Europe, South America, and Asia Pacific.

The short sellers believe that Carnival Corporation & plc (NYSE:CCL)’s higher valuations continue to pose a critical risk. The stock currently trades at ~10.02x its forward earnings, which is higher as compared to the sectoral average of ~7.75x. Moreover, the bears believe that if the interest rate cuts don’t happen as anticipated in 2024, it will be a tough environment for this travel stock, which has high debt levels. Carnival Corporation & plc (NYSE:CCL) has over $27 billion in long-term debt. Therefore, higher interest expenses can weigh over the company’s bottom line in the upcoming quarters of 2024.

However, Wall Street analysts opine that Carnival Corporation & plc (NYSE:CCL) is well-placed for a revival. They believe that demand for cruises is expected to remain strong, with the company’s key performance indicators demonstrating that it should be able to capitalize on this untapped demand.

The repositioning and deployment of cruises to faster-growing and underrepresented regions such as Asia-Pacific continue to provide balance in high-capacity regions such as the Caribbean and Mediterranean before COVID-19. This factor can again be utilized to help optimize forward pricing.  Considering the European demand and occupancy profile which continues to converge on normalized levels, Carnival Corporation & plc (NYSE:CCL) should see improved economic performance. Moreover, it is expected to benefit from a strong market presence. Leveraging this competitive advantage should allow the company to position its strategic sales and differentiation in the industry.

Analysts at Bank of America upped their target price on shares of Carnival Corporation & plc (NYSE:CCL) from $23.00 to $24.00, giving it a “Buy” rating on 27^th June. As per Insider Monkey’s database, 53 hedge funds held stakes in the company.