Was Jim Cramer’s Call Right on These 10 Stocks?

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

Number of Hedge Fund Holders: 58

Royal Caribbean Cruises Ltd. (NYSE:RCL), one of the world’s largest cruise line operators, was held up in the episode as a dramatic COVID recovery story. Cramer noted how the stock rebounded sharply after short sellers bet incorrectly on a permanent decline back then:

“Now have you noticed for instance that the cruise line stocks have been among the best performers for the last 18 months? Especially Royal Caribbean. […]

If you go back and look at the bottom of the covid bear market, you’ll see some owner refinancings for Carnival representing real bankruptcy risk. At the same time the cruise CEOs were telling you not to worry as the months were on because customers always come back to cruising. Too great a bargain for them to ignore.

Oh the hedge funds didn’t believe that though. They shortened the cruise line stocks endlessly and mercilessly but it turned out that the CEOs were right the customers did come back and then the shorts were overrun.

Royal Caribbean Cruises goes from $37 when the pandemic truly began near the end of 2022 to $135. Now that’s the short sellers covering because of the broken covid trade.”

Royal Caribbean Cruises Ltd. (NYSE:RCL) has gained an impressive 62.81% since that episode, validating Cramer’s view on its post-COVID rebound.

Jim Cramer remains a fan of the stock and gave his view on it on the 12^th of March after talking to the company’s CEO:

“What else in travel’s worth taking a look at?… It’s tough for me to square the heinous action with what we just heard from Jason Liberty, the CEO of Royal Caribbean. When he came on the show last week, first, Liberty confirmed that its… consumers perceive Royal Caribbean cruises as a better value than a land-based vacation, reinforcing my view the cruise lines can still do fine even in a softer economy. Second, he cited its own bookings and on-ship spending data from recent voyages saying matter-of-factly, ‘that cash register continues to ring and be consistent.’

Finally, looking at longer term, Liberty noted that, this is so important, understand this major, major ratio, the new supply, meaning new cruise ships, should continue to be limited for the next few years, which is positive for the entire industry’s pricing power. At one point you see the pricing power go down when they have a lot of ships coming. Plus, altogether, I feel really okay about the cruise lines, Royal Caribbean in particular. This had a 25% pullback from its recent high, stock now sells for a very… undermining 14 times earnings. I like that.”