We recently compiled a list of the Top 10 Luxury Stocks According to Analysts. In this article, we are going to take a look at where Carnival Corporation & plc (NYSE:CCL) stands against the other luxury stocks.
The luxury retail industry is facing significant challenges, with major brands like Burberry, Hugo Boss, and Gucci experiencing substantial drops in their profits. The decline in luxury sales, especially in Asia and the Americas, has been a major concern, with Burberry and Hugo Boss seeing notable decreases in their revenue. Other brands such as Richemont and Swatch have also reported significant downturns in sales, particularly in China. The overall luxury market index has seen a sharp decline, which indicates widespread struggles in the sector.
Luxury brands have traditionally relied heavily on Chinese consumers, who have contributed significantly to their growth. However, the slowing Chinese economy and a cautious consumer base have led to reduced spending on luxury goods. The economic slowdown in China is attributed to factors such as lower land sales, an aging population, and decreased exports.
Despite the challenges, some brands made significant strides such as the Italian high fashion women’s clothing and accessory brand, Miu Miu, which saw a nearly 60% growth last year and a 90% growth in the first quarter of this year. This helped its parent company, Prada Group, increase its sales as well.
The luxury market has historically bounced back from downturns, and many in the industry hope that the current challenges are temporary. However, the recent performance has reminded the sector that luxury items are not immune to economic challenges, and consumer demand can fluctuate based on economic conditions and consumer confidence. Nevertheless, luxury brands are comparatively less affected by the economic conditions as most of their purchases are made by a very small group of elite consumers. You can also read our article on Top 11 Luxury Clothing Stocks to Invest in Now, where we discussed luxury consumer behavior in detail.
Our Methodology
For this article, we made a list of nearly 20 luxury stocks with at least Moderate Buy ratings according to analysts and narrowed our list to 10 stocks with the highest average analyst price target, as of August 5. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds as of Q1 2024.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A luxurious cruise ship sailing the deep blue sea, sun glistening off its decks.
Carnival Corporation & plc (NYSE:CCL)
Average Price Target Upside as of August 5: 52.78%
Number of Hedge Fund Holders: 56
Carnival Corporation & plc (NYSE:CCL) is a Florida-based company and one of the largest cruise companies in the world. It runs through four segments, NAA Cruise Operations, Europe Cruise Operations, Cruise Support, and Tour and Other. The company has 87 ships sailing under 9 brands including Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises, and Cunard.
Carnival Corporation (NYSE:CCL) offers services related to leisure travel and has a strong market presence in the luxury travel segment, especially Seabourn and Cunard lines. The company provides cruise packages that have all-inclusive options that cover accommodations, meals, entertainment, and activities.
In addition to cruises, the company provides travel-related services including shore excursions, hotel stays before and after cruises and transportation. It also offers specialized cruises catering to different interests.
In the first quarter, 56 hedge funds had stakes in Carnival Corporation (NYSE:CCL), with total positions worth $1.5 billion. As of March 31, Point72 Asset Management is the largest shareholder in the company with a stake worth $208.494 million.
Carnival Corporation (NYSE:CCL) is one of the top luxury stocks according to analysts. The company is showing strong potential for growth, as highlighted by recent updates from financial analysts. On June 27, Argus raised the price target on the stock to $25 from $20 and kept a Buy rating. This upgrade follows a strong Q1 report where the company achieved record booking volumes at higher pricing. The company also enhanced the efficiency of its fleet. According to Argus, these factors suggest that the stock is currently undervalued, further supporting a positive outlook for the company’s future performance.
Similarly, on July 24, JPMorgan raised the price target on Carnival Corporation (NYSE:CCL) to $25 from $23 and maintained an Overweight rating. This adjustment reflects optimism based on recent observations and feedback from the company. The analyst noted that demand for cruises remains strong, with no signs of a slowdown in key performance indicators. As per the analyst, with a global vacation market valued at $1.9 trillion, the cruise industry is expected to capture a growing share of this expansive market.
Looking ahead to 2024, Carnival Corporation (NYSE:CCL) forecasts a 10.25% increase in net yields compared to 2023, surpassing earlier guidance. The company also expects an adjusted net income of around $1.55 billion, which is $275 million better than previous projections. These developments highlight the company’s strong market position and effective management, suggesting a promising future for investors.
Lastly, Carnival Corporation (NYSE:CCL) has a consensus Buy rating as per the 28 analysts that have covered it. As of August 5, the average price target of $22.00 implies an upside of 52.78% to the current levels.
Overall CCL ranks 5th on our list of the best luxury stocks to buy. You can visit Top 10 Luxury Stocks According to Analysts to see the other luxury stocks that are on hedge funds’ radar. While we acknowledge the potential of CCL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CCL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.