1. Royal Caribbean Cruises Ltd. (NYSE:RCL)
Number of Hedge Fund Holders: 52
Cramer pointed out that Royal Caribbean Cruises Ltd.’s (NYSE:RCL) stock jumped 12% on January 28. When pondering the reason behind the surge, Cramer explained that the company had not only reported a significant earnings surprise but also saw a remarkable rise in the revenue generated per available cruise day. He added:
“How about this gem? ‘Momentum continues in 2025 with bookings accelerating since the last earnings call resulting in the best five booking weeks in the company’s history.’ Oh, and you want some excitement that got the analysts totally jazzed? In 2027, Royal Caribbean will be introducing river cruising with 10 new ships to take advantage of a fractured market. It’s double-digit growth over the last decade.”
Cramer noted that Royal Caribbean (NYSE:RCL) has a strong reputation, making it easier to imagine the company gaining more market share. This growth potential has led analysts to revise their estimates, not just for the immediate future, but for the coming years as well. Cramer also pointed out an interesting trend with Royal Caribbean and other cruise lines, they are so skilled at what they do that analysts often struggle to keep up with their actual earnings power. As a result, the companies consistently report better-than-expected numbers, which leads to significant rallies in their stock prices. He then said:
“Maybe Wall Street keeps getting taken by surprise because, let’s face it, this industry is full of snobs who don’t understand the appeal of going on a cruise. In fact, they probably wouldn’t be caught dead on one, which is why they can’t get their heads around these stocks. So what’s the appeal? As Jason Liberty, Royal Caribbean’s… CEO laid out in the conference call, ‘Consumers place significant value on visiting multiple destinations and this is even more important to millennial and Gen Z consumers.’ Meanwhile, the macro environment, Liberty says, favors experiences over things as leisure and travel spend continues to grow.”
Cramer highlighted that cruise lines like Royal Caribbean (NYSE:RCL) have become more disciplined in managing their fleet growth after the lessons learned during the pandemic. He noted that in the past, companies frequently added new ships without enough caution, but now the industry is more resilient due to its more careful approach to capacity expansion.
While we acknowledge the potential of Royal Caribbean Cruises Ltd. (NYSE:RCL) 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 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 was originally published at Insider Monkey.
