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Booking A 30% Gain From Carnival

Apr. 09, 2021 6:30 PM ETCarnival Corporation & plc (CCL)14 Comments


  • We invested in Carnival shares back in January, and the stock has now reached the high-end of my target price.
  • The best is yet to come for Carnival from a financial performance perspective, but the risk-reward profile is no longer attractive for value investors.
  • My investment thesis for Carnival was based on three pillars and an evaluation of the current state of these three factors confirms Carnival is now richly valued.
  • This idea was discussed in more depth with members of my private investing community, Leads From Gurus. Learn More »
Cruise Ship Downtown Port of Miami Florida Travel Destinations USA
Photo by Lorraine Boogich/iStock Unreleased via Getty Images

Important: This article was originally published for members of Leads From Gurus on April 8, 2021. All data is as of April 8.

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This article was written by

Dilantha De Silva profile picture
I am Dilantha De Silva, an investment analyst with 8+ years in the investment management industry. Before becoming an independent publisher, I worked as a buy-side analyst in a leading boutique wealth management firm in Dubai where I dedicated my time to identifying U.S. small-cap stocks for the funds managed by the firm. I am the founder of Beat Billions, a premium Investing Group on Seeking Alpha focused on identifying alpha-generating thinly followed stocks in the market. I am a CFA Level III candidate and an Associate Member of the Chartered Institute for Securities and Investment (UK).

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (14)

Meistersinger profile picture
Appreciate your transparency and efforts. Thank you
PennyPlanSupporter profile picture
There is no financial basis for $CCL to trade above $35 for the next four quarters.

Industry leader Carnival has raised $23.6B since March 2020, lifting its expected net debt to $23B by the end of its current fiscal year, up from $11B at the end of 2019, the company's projected interest expense this year of $1.7B is up from $200M in 2019, and its shares outstanding have jumped to 1.1B from 700M.
Thank you for your thoughts and being wise enough to take money off the table. I would further suggest that selling assets, ie ships, while bringing on three new may be difficult to overcome revenue losses. Thus I'm looking at more equity outstanding, more debt service with less assets and higher operating expenses because of new COVID-19 sailing health safety issues constraining EPS.
0/0 profile picture
10 Apr. 2021
It's a harder decision to sell a winner than to buy in the first place. But it's good to have a profit goal in mind and be willing to follow through.
If your plan is to buy and hold pretty much indefinitely, that's a different strategy altogether. Kudos to you on sticking to your plan. Most of the time it's when we change our minds and alter our plan that we get into trouble.
I bought at 10.50 last year & will not sell until 45 plus !
Too early
And you haven’t even considered the higher debt levels. Enterprise Value now is well above pre Covid. But having said that, Valuations are nuts across the board so who knows where this thing might finish up, but is that a game one needs to play?
Reading is never enough profile picture
As I had carnival from 2018 at 58,9 ,and lost a huge amount by selling at 20,9 .I think that it reached 30,for two reasons :
1)as I sold early,after one week started to go sooooo higher 😂
2)because of greed,some wanted quick gains from an ex huge player in cruise industry .
I would have sold certainly if it had reached this levels.
I think the writer is really protecting his readers.
For some carnival made huge money,and as they played with fire and gained, they were brave,and they deserve the gains they made and they should be intelligent and sell.
For me it was a looser from the beginning and it was bought for me from my financier.
If I was asked I would say as a person that goes cruising with silver sea (the best I would say)that cruises have enormous expenses,yes people cruise but really the expenses are huge.I am always curious how they make money.and it has to do that they find solutions to reduce their taxes.which is the reason that now they are in an even worse situation.
Now with COVID every day I would consider how they would go out of this mess.
Because the huge expenses were there every single moment around.Dubai and Saudis invested heavily in carnival,that is way they are alive.Get your gains and smile.
Actually I took my losses and smiled .
I did the same after it dawned on me that a lot of cruise and airline stocks had market caps fully recovered from pre-covid levels. The stock prices are so misleading after the massive secondary issues the last year.
sgtgibby profile picture
I cashed out a little bit too soon with about a 22% gain. But I'm happy I did I just didn't think it was sustainable to continue going up in this environment. I booked my gains and I'm investing the money elsewhere. Never hurts to take a profit.
I picked up a considerable holding this time last year at $8.02 & $8.07, so ahead 294 percent. At that time with the shares down from $56, it seemed like a no-brainer. Credit Suisse and UBS have a 12-month target of $40 and $42, respectively, on CCL and, frankly, the cruise industry has yet to really gather full steam. When it does -- and that appears to be in the offing -- the gain in the share price should be considerable. As I've written before: cruises come with a cult mentality. Selling would be easy. Where to invest the return? More difficult.
excellent article and well timed. thank you for sharing.
Shares outstanding now 1.15 billion shares....
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