Wall Street Favorites: 3 Cruise Stocks with Strong Buy Ratings for May 2024

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Cruising is back in a big way. But you don’t have to enjoy cruising to start looking for cruise stocks to buy. All you have to do is remember a few key statistics from the 2024 State of the Cruise Industry report published by the Cruise Lines Industry Association.  

First, after years of struggling to reach 2019 levels, cruise travel in 2023 reached 107% with 31.7 million passengers. And the number of travelers was up in virtually every region. Global cruise capacity is expected to grow by at least 10% in the next five years.  

Plus, the core cruise traveler is less than 40 years old, so there’s little danger of consumers getting aged out. 10% to 13% of Millennials and Gen-Z travelers are comfortable traveling alone, which fits other trends in our society.  

And when you consider that cruising currently only accounts for about 2% of the travel and tourism sector, there’s plenty of room for growth. So before you finalize those vacation plans (possibly a cruise), you should look at these attractive cruise stocks.  

Royal Caribbean (RCL) 

Deck of a Royal Caribbean (RCL) cruise ship looking over the ocean

Source: Venturelli Luca / Shutterstock.com

Royal Caribbean (NYSE:RCL) came roaring back to pre-pandemic revenue level and, more importantly, profitability in 2023. Not surprisingly, RCL stock has been up more than 84% in the last 12 months, making it one of the top-performing stocks in its sector and the entire market. And since reporting earnings in late April, Royal Caribbean stock has surpassed pre-pandemic levels. 

Also, in that earnings report, the cruise line raised its full-year guidance and reported refinancing $1.25 billion in debt. That should alleviate concerns about the company’s debt-to-equity ratio of 3.54.  

Like many cruise lines, Royal Caribbean forecasts strong demand for the remainder of the year. And the company is successfully monetizing those passengers. In the last quarter, it reported a 14% increase in the adjusted gross margin per passenger per cruise day. Plus, 100% of this additional revenue flows to the company’s bottom line. 

In addition to that positive news, RCL stock has an attractive valuation of just 12x forward earnings. With the company’s plans to launch four new cruise ships in the next two years, you can see why RCL stock belongs on your list of cruise stocks to buy.  

Norwegian Cruise Line Holdings (NCLH) 

Norwegian Cruise Line ship arriving at a port. NCLH stock.

Source: Ian_Stewart / Shutterstock

It took a while, but Norwegian Cruise Line Holdings (NYSE:NCLH) is finding some smooth sailing. In 2023, the company reported $8.55 billion in revenue, pushing the cruise line’s revenue above 2019. That revenue growth continued in the first quarter of 2024. Norway recorded $2.2 billion in revenue, which was 20% higher year-over-year.  

On the earnings front, the news was even better as Norwegian turned a loss of 37 cents per share in the first quarter of 2023 into a 16-cent per share gain. That beat even the bullish expectations for 12 cents per share.  

Moving forward. Norwegian expects gross capacity growth to increase at a compound annual growth rate of 6% through 2028. The company also increased its full-year guidance in key areas such as adjusted net income and EBITDA.  

However, NCLH stock is down about 9% in the 30 days ending May 15, 2024. This seems to be a bit of an overreaction to the company’s revenue, which, although higher than the prior year, missed analysts’ estimates by 1.99%.  

Viking Holdings (VIK) 

MV Viking Star in North Sea Canal. Detail of funnel. VIK stock and VIK IPO

Source: StudioPortoSabbia / Shutterstock.com

Viking Holdings (NYSE:VIK) went public via an initial public offering (IPO) on May 1, 2024. The stock debuted at $26.45, now over $28 per share.  

Some of that enthusiasm is due to the fact that the IPO market has been dry for the last few years. However, a bigger reason is that Viking Holdings is not a new company. And it’s a company with a history of being profitable as a private company.  

The company offers a distinctly premium cruising experience targeted to affluent consumers with features such as no children on board and no on-board casinos. The company also cruises to niche destinations that these consumers will embrace.  

There’s a lot to like about VIK stock. However, before you decide if Viking is one of your cruise stocks to buy, you’ll want to pay attention to the company’s first earnings report as a publicly traded company. That will occur on May 29, 2024. If the company delivers revenue and earnings, and more importantly, the forward guidance analysts expect, a $28 price target may be a floor and not a ceiling.  

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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