We recently published a list of 12 Best Cruise Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) stands against other 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.
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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.
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).
A luxurious cruise ship overlooking a stunning horizon, highlighting the variety of its itineraries.
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH)
Number of Hedge Fund Holders: 58
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is a global cruise company that operates Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises. It operates a fleet of 32 ships and over 66,500 berths, offering itineraries to more than 700 destinations worldwide. The company’s brands offer a range of amenities, activities, and features, including bars and lounges, multiple dining venues, retail shopping areas, spas, casinos, and numerous entertainment choices.
On April 7, Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) announced the execution of long-term charter agreements for four vessels across three of its brands: two Norwegian Cruise Line vessels, Norwegian Sky, and Norwegian Sun. The vessels would be chartered to Cordelia Cruises, a premium India-based cruise operator, and are expected to begin in 2026 and 2027. Insignia from Oceania Cruises and Seven Seas Navigator from Regent Seven Seas Cruises will be chartered to Crescent Seas, which is a residential cruise line.
Jefferies analyst David Katz initiated coverage of Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) on March 31 with a Buy rating and a $25 price target. The firm expressed bullish sentiments for the cruise sector and cited “compelling demand” from the trade-down value-travel tailwind and constrained industry supply growth through 2030. The analyst told investors in a research note that Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) holds various positive traits as the fourth largest cruise line in the world and that there is “reasonable” capacity for the company with a relatively new CEO pushing cost efficiency.
Overall, NCLH ranks 4th on our list of best cruise stocks to buy according to hedge funds. While we acknowledge the potential for NCLH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NCLH but 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.