12 Most Undervalued Travel Stocks to Buy According to Hedge Funds

7) Royal Caribbean Cruises Ltd. (NYSE:RCL)

Forward P/E Ratio as of 13 September: 12.72x

Number of Hedge Funds: 48

Royal Caribbean Cruises Ltd. (NYSE:RCL) operates as a global cruise company, which operates a fleet of vessels in the cruise vacation industry.

Wall Street analysts believe that consumer interest in travel maintained momentum for Royal Caribbean Cruises Ltd. (NYSE:RCL), resulting in robust demand and pricing (ahead of 2019 levels) at its business. Given the healthy advance booking patterns, the company is expected to report record pricing moving forward. Coming to the cost side of things, market experts opine that expenses will be better managed, with occupancy well-positioned to return to historical levels for 2024, driving profitability.

The company’s 2Q 2024 results were aided by stronger-than-anticipated consumer demand, robust onboard spending, strong pricing momentum, and solid cost containment measures. Royal Caribbean Cruises Ltd. (NYSE:RCL) continues to benefit from numerous new mega-ships, and more island destinations, together with re-entry into the Chinese market.

Royal Caribbean Cruises Ltd. (NYSE:RCL) released second-quarter EPS of $3.11 and adjusted EPS of $3.21. These results were better than its guidance as a result of stronger pricing on close-in demand, strength in its onboard revenue, and favorable timing of expenses of ~$0.15. Due to continued robust demand for vacation experiences, the company increased its FY 2024 adjusted EPS guidance to $11.35 – $11.45, or 68% YoY growth.

The company has seen exceptional demand for its vacation experiences, which supported its performance by posting significant yield growth over the past few years.  Tigress Financial upped its target price on the shares of Royal Caribbean Cruises Ltd. (NYSE:RCL) from $155.00 to $210.00, giving the stock a “Buy” rating on 2^nd August. Notably, 48 hedge funds held stakes in the company at the end of 2Q 2024, as per Insider Monkey’s database.

Ariel Investments, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:

“Global cruise vacation company, Royal Caribbean Cruises Ltd. (NYSE:RCL), advanced on another quarterly earnings beat and subsequent raise in full-year guidance. Stronger than anticipated consumer demand, healthy onboard spend, robust pricing and solid cost containment lifted recent results. Additionally, RCL is benefitting from several new megaships, more island destinations and re-entry into the China market. The resiliency of the core cruise consumer, in combination with management’s superior operational expertise and revised earnings outlook, lays the foundation for RCL to exceed its three-year strategic imperative, the Trifecta Program, a year earlier than expected.”