What's Happening
Cruise operator Carnival ( CCL ) is expected to report its fiscal fourth-quarter numbers before the market opens December 19. The consensus calls for earnings of $0.50 per share, down from $0.67 during the same period last year. The stock has risen 25.0% on the year.
Technical Analysis
CCL was recently trading at $65.52, down $4.37 from its 12-month high and $14.75 above its 12-month low. Overall technical indicators for CCL are neutral and the stock is in a sideways trend. The stock has recent support above $64.30, and recent resistance below $67.10. Of the 14 analysts who cover the stock, eight rate it a "strong buy", and six rate it a "hold". CCL gets a score of 64 from InvestorsObserver's Stock Score Report.
Analyst's Thoughts
Carnival has risen 25% on the year, but shares have been stuck in a sideways trend over the last three months. CCL has an attractive valuation, with a P/E of 17.7 and earnings are expected to rise 15.9% next year, and by 12.7% per annum over the next five years. The company has topped estimates on the top and bottom lines each of the last three quarters, and the street expects another beat for the company's fourth-quarter. The consensus calls for earnings of $0.50 per share, but the street has a whisper number of $0.54, which illustrates how bullish traders are on the company's underlying business. CCL trades at $65.52, with an average price target of $72.22.
Stock Only Trade
If you're looking to establish a long stock position in CCL, consider buying the stock under $65.50. Sell if it falls below $59.00 or take profits if it gets to $75.25.Bullish Trade
If you want a bullish hedged trade on the stock, consider an April 55/57.50 bull-put credit spread for a 25 -cent credit. That's a potential 11.1% return (32.2% annualized*) and the stock would have to fall 14.7% to cause a problem.
Bearish Trade
If you want to take a bearish stance on the stock at this time, consider an April 75/80 bear-call credit spread for a $0.40 credit. That's a potential 8.7% return (50.4% annualized*) and the stock would have to rise 11.4% to cause a problem.
Covered Call Trade
If you like the stock, but wish to lower your cost basis on a new position, you may want to consider an April $67.50 covered call. Buy CCL shares (typically 100 shares, scale as appropriate), while selling the April $67.50 call for a debit of $62.70 per share. The trade has a target assigned return of 7.6%, and a target annualized return of 22.6% (for comparison purposes only).The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Originally published on InvestorsObserver.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
