Happy Friday afternoon to everyone on The Street. 

And happy holidays, Street Team! As a reminder, this week, rather than our usual column, “Tomorrow’s Trade Idea, Today”, we’ll be spotlighting “Yesterday’s Top Trade Idea, Today”: a handful of our previous stories that matured like a well-fermented sauerkraut: sharp and full of flavor.

While — as you already know by now — past performance is not indicative of future results, we’re curious to hear if you still think there’s some flavor left in today’s stock. Let’s get to it.

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YESTERDAY’S TOP TRADE IDEA, TODAY

Okay, so this story wasn’t technically published in 2024, but on 12/17/2023.

We did publish several other stories on the cruise ship sector throughout the first half of this year. But we thought it’d be most impactful to share what we were saying about companies like Royal Caribbean (RCL) going into a year where its stock notched a total YTD gain of 84%, outpacing the S&P 500’s gain of just over 24%, as of Friday, December 20.

And if you think that’s interesting, just wait until you see what analysts are saying about the industry heading into next year…

Smooth Sailing Ahead

Post-Pandemic Boom

Cruise line stocks were hit hard during the pandemic. A slow post-pandemic recovery has finally propelled the stocks to have an incredible year following a huge uptick in demand. 

This sailing trend is expected to continue into the new year, with an estimated 35.7 million customers expected to embark on a cruise in 2024. This is a 4.2 million passenger increase from 2023. 

Shares of Royal Caribbean (RCL), one of the biggest cruise lines in the world, are up a whopping 140% in 2023. Carnival (CCL) and Norwegian (NCLH) aren’t far behind, up 120% and 51% respectively.

Last, but Not Least

Cruise lines were some of the last travel companies to recover from the pandemic. Then, a combination of high oil prices, war in the Middle East, and a shutdown of Hawaiian travel due to the Maui fires hampered cruise line travel. 

These days, oil prices are low again and Hawaii is open for business. Just since October 31st, Carnival is up 55%, Royal Caribbean is up 38%, and Norwegian is up 37%. Talk about finishing the year strong.

Continuing To Climb

Despite these massive gains, Wall Street analysts are expecting the stocks to climb even higher. Royal Caribbean is considered best-in-class by analysts, largely due to its high-quality ships.

Analysts are still bullish, pointing to a favorable stock price and the fact that cruises are around 30% cheaper than a traditional vacation. However, they want to keep in mind that the industry is susceptible to downturns, highlighted by the events of the past few years. 

As post-pandemic travel continues to grow, cruise lines are benefiting from consumer confidence. It’s a sector investors may want to follow as we cruise into the New Year.

Original Poll Results

Are you bullish or bearish on Royal Caribbean (RCL) stock over the next 12 months?

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨🟨🟨⬜️⬜️⬜️ 🐻 Bearish

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