David BurrowsRoyal Caribbean CruisesRCLPAST TOP PICKSep 13, 2016

Cruising remains an attractive, affordable way to travel. You can't make enough new ships today, so all rooms are sold out in advance as prices rise. But at some point, the backlog will clear up, or there will be a pullback in consumer spending--that's the challenge. Will benefit from the aging population.

Has done very well, post-Covid, but shares are own 13% the last week, because their reservation book isn't being filled fast enough--a sign of a slowing consumer.

They've had a remarkable turnaround in reducing debt.

The best of the cruise lines.

The completion of new cruise ships will constrain supply and be positive for cruise ships' pricing power. Is -25% from highs and trades at 14x PE.

Key in this industry is the supply of ships. When they make too many, it's tough to own these stocks. Now, there aren't enough ships.

RCL had a big quarter just announced, and of course has staged a huge recovery from the pandemic. Royal's expectation of a 3.5% yield gain in 2025 echoes robust onboard spending and strong demand for Europe and Alaska itineraries, with accelerated bookings in the last five weeks. Royal characterized its plan to launch river cruising -- with an initial 10-ship order and several launching in 2027 -- as an opportunity to gain share in a complementary, high-end niche with shorter construction lead times and cross-marketing opportunities. That plan sets the stage for a river fleet with capacity about 11% the size of rival Viking, including current and ordered vessels. Royal's 1Q guidance midpoint implies gains of 5% in yield and 1.85% in non-fuel unit cost. Its 4Q unit-cost growth of 13.5% was slightly above 11.6-12.1% guidance due to 340 bps from higher stock-based compensation. The stock is 18X earnings and very strong growth is predicted. It is still heavily leveraged at debt/cashflow 4X, but it is in better financial shape than many peers. Cyclicality of course remains high, but we think it is interesting as a higher risk buy for those investors willing to accept some financial and economic risks here. Its recent results and move to river cruises we think are quite positive developments. 
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It feeds into the travel theme, surprising in 2024. Cruise lines and airlines did well this year.

Good-looking chart, the trend is your friend. Slightly off its trendline, so a correction is probably due and you can buy on that pullback. Perhaps correcting to the $210 level.

He doesn't like how everyday another analyst raises their price target on his stock. He prefers Viking now.

They defied even his own skepticism. They delivered a remarkable quarter: renewed strength from Asia, helped by stimulus in China. They lead in cruises.

Both are good. RCL is s good play on the consumers. Shares are up 35% this year. NVDA: he just heard from demand for their Blackwell is insane.

In the space, he'd prefer a name like RCL, given its scale and leadership capabilities. Performing well from a technical perspective. Though lower interest rates will help the debt situation, you do need to be concerned in the near term with the consumer and the economy.

Up till Covid, well-positioned to take advantage of increased cruising. Had to offer new shares, which diluted shares and increased debt. Clawing their way back up from lows. Cruise industry is very positive for next 12 months. Down with overall market today.

RCL is in better shape and better managed.

He took profits not too long ago. Likes the name longer term, demographics speak to more travel. He'd prefer a name like BKNG, which takes away cost of ship maintenance, etc.

The leader among the top 3. Chart's a bit extended, overbought. He'd consider it at a lower valuation.