This Slowly Recovering Industry May Continue to Surprise to the Upside

Many industries have moved on from the pandemic. For those in travel and tourism, however, trends still remain far under pre-pandemic levels.

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  • However, the trend is improving, albeit slowly. One such sector that’s continuing to recover is the cruise industry. Completely shut down for nearly a year, the slow resumption of cruises in the post-pandemic era is a true sign as to whether or not large, confined crowds can come together without creating health scares.

    So far, signs are good. And Carnival Corporation (CCL) is nearing a key metric with over 50 percent of its fleet capacity sailing soon.

    While still far under the pre-pandemic travel, demand remains robust and prices for cruises remain low to entice customers back. Many customers don’t need the enticement, as they’re looking to get out and about following last year’s lockdowns.

    Action to take: While shares of Carnival rallied on the news of higher capacity use, shares are still under 52-week highs, and still trade at about half of their pre-pandemic price near $48 per share. However, the price has been trending up since early 2020, a move likely to continue.

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  • Investors can likely see more capital gains in the months ahead, and shares are a worthwhile addition to a portfolio, particularly as the company comes off of steep losses and moves closer to profitability. Of course, shares don’t pay a dividend at this time, but could in the future.

    For traders, the uptrend in shares is likely to continue. A long-dated call trade, like the April $27.50 calls, last going for about $2.40, offer an inexpensive way to play the current trend higher.

     

    Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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