To The Moon

🌟🌟🌟$Carnival(CCL)$  is the largest global cruise company and among the world's largest leisure travel companies.  Carnival owns a portfolio of world class cruise lines which are very popular such as Princess Cruises, Holland America, Costa Cruises, Cunard, Aida Cruises, P&O Cruises, Seabourn and of course Carnival Cruises.

Carnival, like all other cruise companies, was badly affected by the Covid lock downs but has since recovered well. 

At the end of fiscal 2023, Carnival had 92 ships across 9 different brands. Carnival has capacity of 263,300 passengers which is almost 38% of the total global capacity of 701,000.  Since December 2023, Carnival has taken possession of 4 more ships that added almost 17,000 additional passenger capacity.

Business is booming.  Passenger Cruise Days or PCDs are up 14% to 47.8 million over the first 6 months of the current year, helping to boost Carnival's revenue by 20% to USD 11.2 billion.  Carnival generated USD 806 million in operating income, a significant turnaround from the USD 52 million loss it incurred last year.  2nd quarter revenue of USD 5.8 billion was a record for Carnival. 

However Carnival is still weighed down by its massive debt load.  Although it paid down more than USD 1.3 billion in the past year, it still has USD 27.1 billion in long term debt on its balance sheet versus USD 1.6 billion in cash and equivalents.  Nonetheless, Carnival ended the quarter with USD 4.6 billion in available liquidity. 

Over the past 2 years, Carnival stock is up 59% compared to a 35% gain by the S&P500.  Trading at 10 times earnings estimates, a fraction of its sales and 12 times free cash flow, Carnival looks like a stock to buy at these levels. 

Carnival is scheduled to report its Q3 Financial Results on September 30.

 Carnival share price is trending upwards this week with a closing price of USD 18.03, up 1% on Tuesday and 11.5% in the past 5 days.  In the past month, Carnival has risen 15%.  It is  now up 4% year todate and in 2023, Carnival has risen 19%.

Wall Street Analysts are bullish on Carnival with a Buy rating, Average Target price of USD 21.64, an upside potential of 20% according to Tipranks. 

I have just started to invest in Carnival in August and I am happy with its performance.  I am an avid cruiser and believe that Carnival is undervalued and oversold for what it offers. 

According to Cruise Market Watch, the 2024 ocean cruise industry is estimated at USD 66.2 billion dollars, a 13.8% rise from 2023 with 30.1 million passengers carried annually, a rise of 4.2% from the previous year. 

Carnival has a wide moat as it dominates the cruise industry with 42.9% of passengers   a total of 12.9 million in 2024 along with a revenue share of 37.3%.  In contrast its closest competitor, $Royal Caribbean Cruises(RCL)$  has 25.7% passenger share amounting to 7.7 million passengers and a revenue share of 23.9%.

Over the long term, I believe that Carnival is well positioned to benefit from favourable demand trends in the Cruise travel market, which is growing faster than the USD 1.9 Trillion global travel industry. 

As Carnival continues to report strong demand and increases in operating profit, I believe that its share price will break out to new highs in the future.  I am super excited and look forward to that explosive growth ahead. 

This is one boat ride I don't want to miss! 

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