Hop On Board Royal Caribbean Cruises When The Economy Sinks

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About: Royal Caribbean Cruises Ltd. (RCL), Includes: CCL
by: Edgar Torres H
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Edgar Torres H
Long/short equity, special situations, event-driven, momentum
Summary

Royal Caribbean is considerably exposed to economic cycles.

I identify four key issues that affect RCL's results. These likely worsen substantially when the economy enters a recession.

My valuation of the company suggests that there's substantial upside at current prices. However, I think that's only half the story.

I believe the market assigns RCL a higher-than-average discount rate because its performance is tightly linked to macroeconomic factors.

Royal Caribbean is an excellent long-term buy during a recession. It's probably better to wait until it's on sale once again.

Royal Caribbean Cruises (NYSE:RCL) is an excellent business with predictable revenues and shareholder-friendly management. Its market is somewhat stable, and it should work well over the long-term. Still, macroeconomic risks and intense need