Entering text into the input field will update the search result below

There Is Still Time To Buy Carnival And The Upside Is Huge

The Asian Investor profile picture
The Asian Investor


  • Carnival’s business update showed increasing strength in bookings. Interest in ocean cruises after a year of lockdowns is going through the roof.
  • The CDC could feel compelled to open up the cruise line sector sooner than expected. This would be a BIG catalyst for the sector and CCL.
  • Carnival's outlook is improving as is the sector outlook. Revenue and EPS estimates are very low and will likely be refreshed once the reopening takes place.

cruise ship
Photo by jgroup/iStock via Getty Images

Reports and business updates out of the cruise line sector are increasingly bullish. Carnival Corporation (NYSE:CCL) is facing positive industry developments and a very strong booking situation. The CDC could reopen the cruise

This article was written by

The Asian Investor profile picture
I look for high-risk, high-reward situations. Five largest portfolio holdings: Bitcoin, SoFi, Alibaba, PayPal, Western Alliance. Early buyer of cryptocurrencies. I live in Thailand :)

Analyst’s Disclosure: I am/we are long NCLH. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (46)

HUGE upside!!
"Carnival's historical P-E ratio has been between 10-15 ... much higher than today."

Not a bad article, and I have been long CCL for a long time, but this isn't really a buy signal. The P/E is zero because they are LOSING money. There's nothing about a company that is losing money that makes it a guarantee they will make money in the future.
High Sharpe profile picture
Between 2018 Sep and 2021 the shares outstanding went from 700 mil to over 1 bil. the long term debt went from 9 bil to 28 bil. Im sorry equity is probably toast
Banker300 profile picture
Good article. In my view, the catalyst for the stock to move higher is the COVID19 reopening, which would be triggered by the CDC. The stock will catapult once that occurs. The big question here is when, not if. A delayed reopening may create a debt repayment issue but the market is flush with liquidity. I think this is a smaller risk since CCL can either raise equity or refinance debt in the debt markets at junk rates. Not a major issue right now.

Of course, demand for CCL's product is strong. Consumers are flush with cash and have been staying home for over a year. People want to get on with life and go on vacation!

My biggest concern is the lack of progress in vaccinations in Europe. It is clear that the most developed countries in Europe- Germany, France, etc. are behind in vaccinating their populations. Some countries (Greece and Italy) have strict lockdowns still in place. This is a major problem.

Steady state EPS is in the $4/share range, and a PE ratio of 10-15x, indicates a target price of $40-60/share.

I have not bought yet but I plan to do so this week.
Author....I think u have a biiig typo in your article...the recent high was $30.63, not $36.63.
I know because I kicked myself for not selling at those levels when it failed to hold them...
kbaba profile picture
Best to do actually math of the impact of new dilution and increased debt service plus fewer ships on potential earning per share going forward. I'd say valuation is already unrealistically high and based on positive sentiment already
Banker300 profile picture
@kbaba Solid points. Buy on the rumor, sell on the news.
Think Long Term profile picture
Time to sell this fast....they won't be making money for a very very long time
The crazy ones buying this at such a lofty price and valuation will be taught a harsh lesson soon....I will buying puts very soon.....

They can't make money giving away the boats.....they can't service the massive debt load for long with no revenues...look at the promos they have been doing for over 1 year now...bookings might be up but not their revenues

Sail by April 2023

Exclusive Casino Rates
$500 Onboard Credits*
Free Drinks On Us

FREE* Interior Room
$200 in FunPlay® credits
Free Drinks On Us!†
Banker300 profile picture
@Think Long Term The driver of demand for cruises is the retired population. These folks are chopping at the bit to get out and vacation. Selling ships only strengthens the balance sheet.
Buy, buy, buy.
There is no upside, you don't understand how taking on debt and diluting shares of the stock works. It is a bubble, the price all these cruise stocks are at now is equal to a record high before Covid broke out if you factor in the debt levels. I truly think the current prices are a tremendous selling opportunity because a ton of risk lies ahead when they actually start sailing again - does another diamond princess scenario happen? How many people can be packed into the cruise ship without danger? Do the vaccines hold up 6 mths or do they not work on variants? How many people still will cruise for the next couple years? It's all risks buddy and like I said, the stocks are priced way up - they could easily be trading below the lows set last spring if stuff does not go perfectly - that means like $3 a share, ooach!!
@Dan Terry By the way, I already made my money on NCLH, got in around $9-$12 a share and sold out around $27/share. The trade is already done and the money is already won, I am not touching it now at almost $30.
The Asian Investor profile picture
@Dan Terry Yes there is upside...not as much as last year, but Yes. Just because they issued debt and equity doesn't mean there can't be upside ... and the news are increasingly positive.
metalhead profile picture
It’s articles like these that make me shake my head at the level of ignorance of basic math and physics out there.

So there is increased booking activity ... that’s nice but I hope the author has a time machine or knows of one because in order to monetize those bookings you’re gonna need one.

That’s because we have gone a full year with zero cruises and that time cannot be printed or recreated. All those bookings are doing is keeping CCL afloat while it dilutes current shareholders and takes on more debt.

Someday there will be cruises, but those lost one will NEVER be made up! CCL will also be in no position to take on a huge demand spike if one happens at all, since they’ve offloaded 19 ships.

When things resume many of the cruises will have been paid with credits, essentially generating little revenue other than on ship purchases. CCL and other cruise lines are borrowing from the future (and an uncertain one at that) in order to stay a going concern right now.

And cruise buyers now better read the fine print on getting a full refund, and good luck with that in a chapter 11 scenario!
@metalhead Physics, wow. Talk about stupid analogies! BTW, just because you lose a hundred dollars doesn't mean you will never make a million, SMH!
The Asian Investor profile picture
@metalhead No, I don't think we need a time machine ... just a bit of patience and the market will reopen just as it did before. But I appreciate your comment regardless.
I wrote this (numerous times, actually in several threads on SA) last summer, but here's an example, in the Comments section (seekingalpha.com/...)

19Jul 2020, 5:00 AM
Comments (1.9K)
Anyone who bought into cruises: you did so knowing they would be a
decade-long (or longer) buy and hold, right? And knowing that
possibly one (or more) may have to restructure? I'm long CCL and NCLH
(both below $10) and also LIND (~$6.50). Am patiently eyeballing RCL
too. I fully expect them all to retest their lows (or even lower)
over the next 12-18 months, and thus I bought leaving plenty of $$$ room
to buy again multiple times if and when that happens. But here's the
simple thing: in investing, you only need one to survive over that
decade+, and the one that does will way than more make up for the ones
that don't. If you're day-swing trading these things, then you're
braver (and, in this old man's opinion, a bit dimmer) than me. Too
many other sectors exist which are way better for daytrading...this
industry, a few months ago, entered the full-on "lottery status."
Great thing about lottery status in Mr. Market is, he'll let one survive
and that one will go on over the decades to decimate any losses you
might had in the others with gains you cannot believe. This is what
investing is all about. Try it sometime. A little sacrifice, a little
patience, a little time (in the scheme of our lives) can produce
wonderful things. Recognize that either external and/or internal events
to the investing markets are the most incredible gifts individual
investors can get. When these events hit (this is my 5th since the
'70s), it's always the best time to be alive and investing. Put those
big boy/gal pants on, and let 'em rip. And the future will love you for
it. Best of luck to us all."

Posting this (above) is absolutely not a knock on @Stone Fox Capital , whom I consider one of the better author/article writers on SA, plus he has a great sense of humor (At Least (fill-in-the-blank) It Is Not IBM!!...hahahaha).
What I am, again---I guess trying in vain to point this out to some of you on SA--- is that posting the above IS.....most definitely IS.....a knock on all the mindless daytrading. Try this once in awhile: buy something, hold it, for years or decades, and see what you refuse to see right now.
Let the vitriol begin...... :-/

The best of fortune to us all
@D. Rider Hmmm, simple really to refute. Buy at $8 sell at $29 took way less than "decades"! More like 11 months! But thanks anyways. There are way more ways to skin a cat these days. People who think there is only one way of doing something are very limited in everything.
If you haven't already bought into the cruise lines, you've missed the boat.
The Asian Investor profile picture
@rocketman3 No, I don't think so. I bought NCLH last year at $14 and then again $18 and there is still room for improvement. Once cruise ships sail out again .. then it is time to sell.
Think Long Term profile picture
I'm not short, I just know better than to invest in a scam being pumped by analysts as bankruptcy looms....just days before Lehman folded analysts were upgrading it too....same with Bear Sterns....AIG same....when they start making absurd valuations and targets like this, its time to sell fast...
The Asian Investor profile picture
@Think Long Term Why would bankruptcy loom now that the sector is just about to reopen and cruises outside of the US are already going?
toh192 profile picture
Eps will never get back to 2018-2019 levels, they issued to many more shares. Add in the debt servicing and your luckily if they reinstate a dividend by 2023.
The Asian Investor profile picture
@toh192 It is true they have been diluting but that doesn't mean there is no upside potential. Do you think a dividend reinstatement would be a catalyst for the stock, positive or negative? :)
toh192 profile picture
@The Asian Investor Wow. Did you follow yesterday’s action? It does kneecap upside potential.
andyjay profile picture
Seeking Alpha...land of bears. CCL is going to do great. Guaranteed.
The Asian Investor profile picture
@andyjay I am surprised at how much criticism this gets. I made good money on NCLH so far and there is still a huge opportunity for a valuation rebound.
earlyriser profile picture
CCLs P/E is much lower than its 10 - 15X? Really? On what planet does that math work?
The Asian Investor profile picture
@earlyriser What exact question do you have. Please let me know and I will try to answer.
Wrong Asian Investor- CCL hit a high of 30.63 not 36.63 so the next level if the news goes there way would be 33 and not 40!
ETC92Guy profile picture
@nobodyneedsmoreBS Thanks for posting. If this would have hit $36 I would have been looong gone. It's obviously a typo but squashed the article cred. I didn't bother with the rest.
When did CCL hit $36.63? Can't find it. I see it in $30 range?
One sided story that is missing so much pertinent information that is ends up trying to be a bull story to lull someone into buying CCL.
William Darusmont profile picture
@trzeuske Is he head of PR for CCL??? What a bunch of BS! Carnival has been chomping at the bit to reopen...fail after fail...time after time...
The Asian Investor profile picture
@William Darusmont CCL has surged more than 134% since last year just for your information but I see you are not here to have a constructive argument :)
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.