In this article, we will look at the 12 Best Cruise Stocks to Buy According to Hedge Funds.
Overview of the Cruise Line Industry
The cruise industry is on the path to recovery after plunging during the Covid-19 pandemic. The Cruise Lines International Association (CLIA) reported that around 35.7 million passengers were anticipated to set sail in 2024, reflecting a 6% growth over 2019. JP Morgan reported that major cruise lines globally benefitted from a successful 2024 wave season, which falls between January and March. In fact, JP Morgan iterated that the annual number of cruise passengers is also expected to surpass pre-COVID levels from 2023 to 2027. Matt Boss, Head of Leisure and Retailing at J.P. Morgan, said the following about the optimistic cruise industry outlook:
“An important point underscoring our more constructive view of the cruise industry post-pandemic is market share gains from the larger $1.9T global vacation market and accelerated new-to-cruise customer acquisition. Demand remains robust, with not a single historical lead indicator in the business, notably booking curve and onboard spend, signaling any softening.”
In the past, baby boomers were at the center of the cruise industry’s core consumer base. This trend is, however, changing with the rise of young travelers. According to CLIA, 73% of millennials and Gen X travelers said that they would consider a cruise vacation. According to Grand View Research, the global cruise market had a size of $7.67 billion in 2022. It is anticipated to grow at a compound annual growth rate (CAGR) of 11.5% between 2023 and 2030, primarily due to the rising popularity of cruise vacations among younger demographics. The more affordable nature of these vacations is another significant factor attributed to this growth.
READ ALSO: 14 Best Farmland and Agriculture Stocks Buy Now and 10 Best Consumer Staples Stocks to Buy According to Analysts.
Are Analysts Bullish on the Cruise Industry?
On March 27, investment firm Exane BNP Paribas’ analysts expressed bullish sentiments on the cruise industry’s long-term outlook, stating that they anticipate cruise net yields to rise steadily in 2025 and 2026. The positive outlook was attributed to strong demand and new revenue drivers for the industry, such as private islands. Exclusive destinations such as private islands allow cruise lines the room to upsell guests on experiences at around $125 per day per person. This is a tailwind for cruise companies devising innovative ways to generate more value for cruisers and raise profits.
The firm also highlighted favorable demographics to support its bullish stance, along with the potential to gain market share in the global vacation market worth around $2 trillion. Exane BNP Paribas opined that cruise lines will likely benefit from rising demand and limited supply growth, which are expected to strengthen pricing power. In addition, digital innovations are helping cruise companies grow onboard spending and enhance customer experiences. According to the firm, these factors are likely to lead to more earnings growth for the industry.
With these trends in mind, let’s examine the 12 best cruise stocks to buy according to hedge funds.
An aerial view of a luxurious cruise ship, surrounded by the blue horizon.cruise
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 20 cruise stocks and chose the top 12 most popular among hedge funds as of Q4 2024. The list is ordered in ascending order of hedge fund sentiment. We sourced the hedge fund sentiment data from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12 Best Cruise Stocks to Buy According to Hedge Funds
12. World Kinect Corporation (NYSE:WKC)
Number of Hedge Fund Holders: 20
World Kinect Corporation (NYSE:WKC) provides fuel and related products and services for marine, aviation, and land transportation industries. Its operations are divided into Marine, Aviation, and Land segments. The Marine segment provides marketing products and services to international and local customers, including cruise lines. Its offerings include distribution and storage, oil and energy procurements, consulting, operations support, financial, and technology services.
The company’s fiscal Q4 2024 adjusted EPS reached $0.62, surpassing estimates by $0.12. World Kinect Corporation (NYSE:WKC) also reported $260 million in operating cash flow in 2024 and returned $139 million to shareholders through dividends and share repurchases, undergoing a 47% year-over-year growth. Over the last years, World Kinect Corporation (NYSE:WKC) has returned $312 million to shareholders through buybacks and dividends, which represents 72% of the free cash flow generated during the period.
Analysts are bullish on the stock, and its median price target of $24.79 implies an upside of 29.08% from current levels. World Kinect Corporation (NYSE:WKC) ranks 12th on our list of the 12 best cruise stocks to buy according to hedge funds.
11. Agilysys, Inc. (NASDAQ:AGYS)
Number of Hedge Fund Holders: 20
Agilysys, Inc. (NASDAQ:AGYS) provides hospitality software delivering cloud-native software-as-a-service (SaaS) and on-premises solutions for cruise lines and other sectors, including hotels, resorts, restaurants, stadiums, corporate food service management, and more. The company offers innovative software for various purposes, including inventory and procurement, document management, payment gateway, reservation and table management, and more. It also serves the gaming industry for cruise lines and other sectors.
On March 5, Needham analyst Mayank Tandon reiterated a Buy rating on Agilysys, Inc. (NASDAQ:AGYS) and set a price target of $100.00. The analyst told investors in a research note that the company has a positive outlook and the potential to overcome current headwinds in its point-of-sale sales and services revenue, which the firm regarded as temporary headwinds. The analyst expects growth to rebound to its usual trends within two to three quarters.
The firm also opined that Agilysys, Inc. (NASDAQ:AGYS) is well-positioned in the considerable $16 billion total addressable market, holding leading products in point-of-sale solutions and property management systems for the hospitality sector. It has also bolstered its sales leadership team, which is anticipated to support not only over a 25% sustained organic subscription revenue growth rate per annum but also expanding EBITDA margins. The company’s strong long-term prospects thus justify the firm’s Buy rating.