Will Norwegian Cruise Line Stock Continue To Trend Higher?

Norwegian Cruise Line stock (NYSE: NCLH) has risen by almost 4% over the last week (five trading days), compared to the S&P 500 which was down by about 1% over the same period. The stock is also up by about 8% over the last month. There are likely a couple of factors driving the stock higher. Firstly, Pfizer’s Covid-19 vaccine received full FDA approval for individuals 16 years of age and older late last month and this could encourage more people who were previously on the fence about getting vaccinated to finally take the shot. With a fully approved vaccine available, the U.S. is looking to impose new vaccine mandates on federal workers, large employers, and health care staff, in a move that could help to moderate the spread of Covid-19. This could augur well for travel stocks. Moreover, the recent Covid-19 wave in the U.S. caused by the highly infectious delta virus variant appears to have peaked and investors are likely to see some value in Norwegian Cruise Line stock, which has declined by almost 25% since early June. Separately, Norwegian’s subsidiary Oceania Cruises saw record single-day bookings for a new cruise ship that will likely begin sailing from April 2023, giving investors some confidence that the longer-term outlook for the cruising industry remains strong.

So will Norwegian stock continue to rise in the coming weeks and months, or is a decline looking more likely from current levels?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price data, returns for Norwegian stock average close to 1.3% in the next month (21 trading days) period after experiencing a 4% rise over the last five trading days.

But how would these numbers change if you are interested in holding NCHL stock for a shorter or a longer time period? You can test the answer and many other combinations on our interactive dashboard Norwegian Cruise Line stock expected return after a fall and vice-versa. You can test the chance of rising over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF NCLH stock moved by -5% over 5 trading days, THEN over the next 21 trading days, NCLH stock moves an average of 4.5%, with a 62.8% probability of a positive return over this period.

Also, given a -5% movement for the stock over 5 trading days, it has historically witnessed an excess return of 1.8% compared to the S&P500 over the next 21 trading days, with a 51.2% percent probability of a positive excess return.

Some Fun Scenarios, FAQs & Making Sense of NCLH Stock Movements:

Question 1: Is the average return for Norwegian stock higher after a drop?

Answer:

Consider two situations,

Case 1: Norwegian Cruise Line stock drops by -5% or more in a week

Case 2: Norwegian Cruise Line stock rises by 5% or more in a week

Is the expected return for Norwegian Cruise Line stock higher over the subsequent month after Case 1 or Case 2?

NCLH stock fares better after Case 1, with an expected return of 4.5% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an expected return of 1.6% for Case 2.

In comparison, the S&P 500 has an expected return of 3.1% over the next 21 trading days under Case 1, and an expected return of just 0.5% for Case 2 as detailed in our dashboard that details the expected return for the S&P 500 after a rise or drop.

Try the Trefis machine learning engine above to see for yourself how Norwegian Cruise Line stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Norwegian Cruise Line stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For NCLH stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The expected return after a rise is understandably lower than after a drop as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

NCLH’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Norwegian stock by changing the inputs in the charts above.