Cruise line stocks have been on the move lately, but the movement has not been unidirectional. First, the stocks fell due to a wave of new infections in key European markets. Then came the recovery, and then the fall again! In the last one week, all major cruise line stocks including Royal Caribbean Cruises (NYSE:RCL), Norwegian Cruise Line Holdings (NYSE:NCLH), and Carnival Corp (NYSE:CCL) have tumbled more than 10%. There are two key questions here. First, why is this fluctuation happening? Simply because no one is certain about the demand recovery. On one hand Covid-19 cases are rising again in Europe and the U.S. – two key markets for cruise line companies – while on the other hand, the bookings for 2021 are improving as evident from Royal Caribbean’s statement. Second – what should investors do in this situation? We have something that can help guide. Our AI engine can help investors capitalize on short and medium term movements in cruise line stocks. Curious? Here is how it works.
Let’s look at Royal Caribbean, for instance. The stock has fallen nearly -16% in the last 5 trading days. Given this information, how might Royal Caribbean move in the near term? Our detailed dashboard highlights Royal Caribbean’s chances of rising or falling to help you understand near-term return probabilities for different levels of movements. It predicts that given the movement in the last 5 days, there is 33% probability of the stock rebounding 5% in the next 1 month. Compared to this, the probability of moving down a further -5% is much higher at 56%. That’s powerful information to act on, but it gets better once you try it out for different time frames. Things change dramatically if we look at a 3 month period, with chances of the stock price moving +5% jumping to 54%. Clearly, the likelihood of rebound increases if you are willing to hold on to your investment.
Are Carnival and Norwegian likely to behave in a similar way? Not necessarily. While the business and demand factors are the same, each stock’s behavior can be different. For instance, for Carnival Corp, which fell nearly 11% in the last 5 trading days, the chances of moving up or down by 5% in the next one month are nearly the same. Check out our interactive dashboards powered by our AI engine, outlining chances of rising and falling for Carnival Corp and how Norwegian Cruise Line Holdings stock might behave going forward.
Cruise line stocks, while a good long-term bet, can be risky in the near-term as we have seen from recent fluctuations. But there are good investment alternatives in the market. For example, here’s a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.
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