Barron's: Avoid Cruise Ship Stocks

Investment Analysis Clubs Destiny Solutions Corporation
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Barron’s headline: Now’s Not the Time to Bottom-Fish Cruise Operator Stocks. Here’s Why.
By Lawrence C. StraussFollow
July 1, 2022 11:00 am ET

https://archive.ph/tU6TX#selection-975.0-1061.610

Shares of Carnival CCL +1.97% , the world’s largest cruise operator, plunged 14% on Wednesday after a bearish research note by Morgan Stanley predicted the stock could fall to $0 in a worst-case scenario. That’s not a typo.

Rivals sank, too. Shares of Royal Caribbean Group RCL +1.09% (RCL) slid 10% that day, while Norwegian Cruise Line Holdings NCLH +1.89% (NCLH) dropped 9%. The stocks lost more ground Thursday, though not as much.

But Carnival (CCL) was the spark that drove the selloff, as Morgan Stanley lowered its estimates for the company’s earnings before interest, taxes, depreciation, and amortization, or Ebitda, citing weaker pricing and ship occupancies, along with elevated costs. Those costs include higher interest payments resulting from the billions of new capital, much of it debt, the company raised to stay afloat since March 2020, when the pandemic sidelined most cruising for more than a year. As of May 31, Carnival’s long- and short-term debt totaled about $35 billion, up from about $10.7 billion three years earlier.

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New additions to the list of zombie companies. So much debt they may not be able to survive rising interest. Some add Boeing to the list. And what about airlines? Business is booming at the moment but do they have resources to survive a recession?

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" Business is booming at the moment but do they have resources to survive a recession? "

Governments still buy aircraft and “war items” during recessions.
The brave new world that appears coming may not allow regular folks to take cruises.

Howie52
At best recession living will not provide many folks with cruises.

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We don’t take a lot of cruises (4? over the last couple decades) but were on one in the Caribbean with Holiday America for a week over New Years. Ship was only half full, which suited us.

Not much of a money maker for them, I suppose.

Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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