We recently published a list of 10 Best Travel Stocks To Buy Right Now. In this article, we are going to take a look at where Royal Caribbean Cruises Ltd. (NYSE:RCL) stands against other best travel stocks to buy right now.
The State of International Tourism in 2024
According to a report by UN Tourism published on September 19, international tourism revived back 96% of the pre-pandemic levels during the first seven months of 2024. Around 790 million tourists were traveling around the globe during the said time, which is 11% greater than that in 2023 but still 4% less than in 2019. As per the report, the key drivers of this growth have been a strong demand for travel in Europe and also the re-opening of markets in the Asia Pacific region.
The Secretary-General of UN Tourism, Zurab Pololikashvili noted that the growth in international tourism has been in line with the projections made by the department. He mentioned that the sector is on its way to achieving full recovery from the biggest crises in history and that too in an environment of economic and geopolitical challenges. Pololikashvili suggested that the recovery highlights the growing demand for international tourism planning and managing companies to cater to the revival in a way that benefits the communities through inclusive and sustainable policies. In addition, to an increase in tourism, the air connections have also improved along with an easing in visa restrictions.
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The report also highlighted that increased air connectivity and visa facilitation have supported the recovery. Data collected by the UN World Tourism Barometer showed that the Middle East remained the strongest region relative to others as it surpassed the 2019 levels by 26% during the first seven months of 2024. Moreover, Africa also remained strong and hosted 7% more tourists than in 2019. On the other hand, Europe and the Americas which host the most tourists combined recovered 99% and 97%, respectively. Despite the robust growth, certain challenges remain unaddressed including geopolitical challenges, extreme climate conditions, and high inflation in certain regions of the world. Regardless, the report anticipates continued recovery and expects strong revenue from international tourism to persist for a long period.
Our Methodology
To compile the list of the 10 best travel stocks to buy right now, we used the Finviz stock screener. Using the screener we aggregated a list of travel services stocks sorted by market capitalization. Next, we ranked these stocks based on the number of hedge fund holders as per Insider Monkey’s third-quarter 2024 database.
Why do we care about what hedge funds do? 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).
An aerial view of a luxurious cruise ship, surrounded by the blue horizon.
Royal Caribbean Cruises Ltd. (NYSE:RCL)
Number of Hedge Fund Holders: 52
Royal Caribbean Cruises Ltd. (NYSE:RCL) is a major player in the travel industry, it operates three well-known cruise brands including Royal Caribbean International, Celebrity Cruises, and Silversea Cruises. Its vast fleet of 68 ships travels to approximately 1,000 destinations across all seven continents, providing diverse itineraries that can last from a few days to several weeks. The company also has a stake in TUI Cruises and Hapag-Lloyd Cruises, which cater to the German market.
Royal Caribbean Cruises Ltd. (NYSE:RCL) had a remarkable year driven by increased travel demand internationally. Its load factor, which indicates how well the ships are filled, reached an impressive 111% during the fiscal third quarter of 2024. This resulted in the company’s revenue growing 17.45% year-over-year to reach $4.9 billion, with a net income of $1.1 billion. More impressively, management was able to improve its gross margin yields by 13.4%, while Net Yields rose by 7.9% in constant currency, driven by higher pricing and onboard spending.
Management expects elevated demand patterns to persist into 2025 and raised its full-year 2024 Adjusted Earnings Per Share (EPS) guidance to a range of $11.57 to $11.62. Moreover, Royal Caribbean Cruises Ltd. (NYSE:RCL) continues to innovate its fleet, it recently launched the Utopia of the Seas, which has received positive market feedback. Additionally, a fourth Icon-class ship is planned for delivery in 2027. It is the 5th best travel stock to buy right now.
Ariel Fund stated the following regarding Royal Caribbean Cruises Ltd. (NYSE:RCL) in its Q2 2024 investor letter:
“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.”
Overall, RCL ranks 5th on our list of best travel stocks to buy right now. While we acknowledge the potential of RCL to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RCL 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.
