Cruise stocks have been among the worst performers in 2020. Cruise activity was banned due to the COVID-19 pandemic. Now that there are two successful COVID-19 vaccine candidates, the markets expect a return to normalcy in 2021. Is Carnival (CCL) a good cruise line stock to buy for 2021?
The FDA has approved the emergency use of both Moderna's and Pfizer’s COVID-19 vaccine candidates. More countries are expected to roll out their vaccine programs in due course. A vaccine rollout would help allay fears of contracting the coronavirus. More people will start moving to outdoor activities after being confined to their homes for most of 2020.
Carnival paired with CTF
In 2003, Carnival and P&O Princess Cruises plc completed a dual-listed company transaction. As part of the transaction, Carnival shares were “paired with trust shares of beneficial interest in the P&O Princess Special Voting Trust.” The trust shares don’t have separate voting rights and can't be transferred separately from the Carnival shares.
Carnival on Stocktwits
Many users on Stocktwits are discussing the delay in Carnival’s earnings release that was scheduled for Dec. 18. User name T3Capital said that he spoke with CCL management and the earnings will be released in January.
Currently, Carnival is making very few revenues due to the ban on cruise activity in most jurisdictions. However, markets will watch out for the losses and cash burn rate in the company's earnings release.
CCL stock forecast
According to the estimates compiled by CNN, Carnival’s median target price of $17.50 is a 19.1 percent discount over its current prices. Among the 19 analysts covering the stock, 13 recommend a hold or some equivalent, two recommend a buy, and four recommend a sell.
Is Carnival stock a buy?
Carnival and other cruise line stocks are winners amid the COVID-19 vaccine rollout. In 2020, stay-at-home stocks rallied due to the lockdowns. In 2021, we could see cyclical stocks, including the consumer discretionary sector, outperform amid the COVID-19 vaccine rollout. We should see a portfolio of outdoor stocks outperform if the COVID-19 vaccine rollout is successful.
As more people get vaccinated, we could see consumer behavior revert towards what we had before the COVID-19 pandemic started. People might take part in more outdoor activities like cruises, going to movie theaters, and going on trips. There could also be pent up demand in 2021. Many people who planned holidays in 2020 will likely want to make rescheduled plans in 2021.
Carnival and other cruise companies have taken on a lot of debt and issued new shares this year, which would lead to higher interest expenses and earnings dilution in the future. The beaten-down cruise stocks including Carnival could be good buys for 2021 and could be the ultimate COVID-19 vaccine winners.