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Kritika Sarmah

3 Travel Stocks to Watch With Holiday Gains Potentially in the Pipeline

The travel industry is bolstered by the rise in solo travel, a growing demand for authentic local experiences, and a rapid embrace of travel technology. So, investors could consider keeping track of travel stocks Carnival Corporation (CCL), Royal Caribbean Group (RCL), and Lindblad Expeditions Holdings, Inc. (LIND) this holiday season.

Growing consumer interest in unique travel experiences and the desire for convenience contribute to the popularity of cruise vacations. Cruises offer a diverse range of destinations and activities in a single trip, attracting a broad demographic.

This year, the revenue in the U.S. cruise market is expected to be $12.50 billion. The industry is expected to expand at a CAGR of 10.1% to reach $18.36 billion by 2027.

Moreover, the steady growth of the global cruise market is attributed to the increasing appeal of cruise vacations owing to cost differentials and amenities. In addition, with a rising focus on environmental conservation, cruise companies are investing in eco-friendly technologies and practices. This not only aligns with sustainability goals but also appeals to environmentally conscious travelers.

Furthermore, the growth of the global cruise market is driven by increasing consumer demand for diverse cruise experiences, including ocean and river cruises, fueled by rising interest in transportation, entertainment, and other cruise applications. Additionally, advances in cruise ship design, onboard technology, and entertainment options contribute to the industry's appeal.

The global cruise market is expected to grow at a CAGR of 11.5% from 2023 to 2030.

Considering these conducive trends, let’s look at the fundamentals of the three Travel - Cruises stocks, starting with number 3.

Stock #3: Carnival Corporation (CCL)

CCL is a leading provider of leisure travel services with a fleet of over 90 ships under various brand names. The company operates globally, visiting approximately 700 ports and offering a range of travel experiences, including cruises and related services.

On December 5, CCL partnered with Neuron, a connectivity management platform, to enhance onboard connectivity across its global fleet of cruise ships. Utilizing Neuron's connectivity management platform, CCL aims to provide faster and more reliable internet access for guests and crew.

The partnership includes deploying Neuron's business intelligence solution and advanced connectivity management tools, reinforcing CCL's commitment to offering the best available connection at sea and driving guest satisfaction.

For the third quarter, which ended August 31, 2023, CCL reported revenue of $6.85 billion, up 59.2% year-over-year. The company generated operating income and net income of $1.62 billion and $1.07 billion, compared to the previous-year quarter operating loss and net loss of $279 million and $770 million, respectively.

Moreover, its EPS amounted to $0.79, compared to the prior-year quarter loss per share of $0.65.

Street expects CCL's revenue to grow 37.1% year-over-year to $5.26 billion for the fourth quarter ended November 2023. Its EPS is expected to improve 83.8% for the same quarter. The company surpassed the EPS estimates in each of the trailing four quarters, which is impressive.

CCL’s shares have gained 70.5% over the past year and 104.7% year-to-date to close the last trading session at $16.50.

CCL’s POWR Ratings reflect its positive prospects. CCL has a B grade for Growth. Within the Travel - Cruises industry, it is ranked #3 out of four stocks. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

In addition to the POWR Ratings stated above, one can access CCL’s additional Value, Momentum, Stability, Sentiment, and Quality ratings here.

Stock #2: Royal Caribbean Group (RCL)

RCL is a global cruise company that operates under various brands, including Royal Caribbean International, Celebrity Cruises, and Silversea Cruises. These brands offer a diverse range of cruise itineraries worldwide.

On December 5, RCL introduced its latest Icon Class cruise ship, Star of the Seas, scheduled to debut in August 2025 from Port Canaveral, Florida. Offering a diverse range of vacation experiences, including beach retreats, resort escapes, and theme park adventures, the ship will feature 7-night cruises to the Caribbean and Perfect Day at CocoCay, The Bahamas.

Star of the Seas, part of the revolutionary Icon Class, boasts eight neighborhoods with unique attractions such as a waterpark, skywalk, and multiple pools, aiming to cater to various traveler preferences and provide flexible and memorable vacation options.

For the third quarter, which ended September 30, 2023, RCL’s total revenues and operating income grew 39% and 323.9% year-over-year to $4.16 billion and $1.27 billion, respectively. The company reported adjusted EBITDA of $1.73 billion, up 132.8% from the prior-year quarter.

Also, its adjusted net income and EPS increased significantly from the previous-year quarter to $1.07 billion and $3.85.

RCL estimates its adjusted EPS to fall within the range of $6.58 to $6.63, driven by strong demand and continued strength in onboard revenue.

RCL’s revenue and EPS are expected to grow 14.5% and 33.2% year-over-year to $4.03 billion and $2.42 for the second quarter ending June 2024, respectively. The company surpassed the EPS estimates in each of the trailing four quarters.

RCL’s shares increased 92.3% over the past year and 131.2% year-to-date to close the last trading session at $114.29.

RCL’s POWR Ratings reflect this promising outlook. The stock has a B grade for Growth. Within the same industry, it is ranked second.

Click here for RCL’s additional Value, Momentum, Stability, Sentiment, and Quality ratings.

Stock #1: Lindblad Expeditions Holdings, Inc. (LIND)

LIND specializes in marine expeditions worldwide, offering ship-based and land experiences. The company focuses on immersive and environmentally conscious travel, providing small-group tours, cycling adventures, and partnerships with organizations like National Geographic and World Wildlife Fund.

On November 15, LIND and National Geographic extended their strategic relationship through 2040, allowing LIND global rights to the National Geographic brand for expedition cruises.

The expanded collaboration includes leveraging The Walt Disney Company's sales channels and enhancing the onboard guest experience with immersive storytelling connected to the National Geographic brand. The partnership aims to reach new audiences and position LIND as a leader in the expedition cruise industry.

On November 2, LIND announced that it had repurchased 875,218 shares and 6.0 million warrants as of October 30, 2023, under the plan for a total of $23 million and had $12 million remaining under the plan.

For the third quarter that ended September 30, 2023, LIND's total tour revenues and operating income amounted to $175.99 million and $20.48 million, up 21.6% and 252.5% year-over-year, respectively. The company reported a net income of $8.46 million, compared to the prior-year quarter net loss of $5.50 million.

Moreover, LIND’s adjusted EBITDA increased 82.6% from the previous year's quarter to $33.95 million.

Analysts expect LIND’s revenue to grow 7.8% year-over-year to $127.20 million for the fourth quarter ending December 2023. Its EPS is expected to improve 55% for the same quarter. The company surpassed the revenue estimates in three of the trailing four quarters.

The stock has gained 22.4% over the past month and 5.7% year-to-date to close the last trading session at $8.14.

LIND’s sound fundamentals are reflected in its POWR Ratings. It has a B grade for Growth. Within the same industry, it is ranked first.

To see LIND’s additional POWR Ratings for Value, Momentum, Stability, Sentiment, and Quality, click here.

What To Do Next? 

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.  

2024 Stock Market Outlook >

RCL shares were trading at $118.51 per share on Wednesday afternoon, up $4.22 (+3.69%). Year-to-date, RCL has gained 139.75%, versus a 20.73% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.


3 Travel Stocks to Watch With Holiday Gains Potentially in the Pipeline
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