When U.S. investors think of cruise stocks to buy on a downturn, they typically think of the top three companies: carnival (NYSE:CCL), Royal Caribbean cruises (NYSE:RCL), and Norwegian cruise line (NYSE:NCLH).
However, there are also several cruise-related companies that are picking potentially attractive stocks at this point in the market. Picking one of the top three players isn’t that easy.
Additionally, it makes a lot more sense to spread your bets across multiple companies that derive a portion of their revenue from the cruise industry – an industry that has generated $55.5 billion in economic activity in 2019 before the pandemic hit – and will benefit again once departures return to normal.
Of the three, I’ve always been a fan of RCL because of the outstanding leadership of former CEO Richard Fain. However, Fain resigned as CEO in early January 33 years at work.
While Royal Caribbean is still my top choice – I got married on one of their ships – I will definitely consider the other two.
Here are my three cruise stocks to buy on a downturn.
|CRUZ||Defiance ETF for hotels, airlines and cruises||$17.03|
Cruise Stocks To Buy At Dip: LVMH (LVMUY)
You’re probably thinking, “It’s not LVMH (OTCMKTS:LVMUY) the owner of luxury brands like Louis Vuitton, Christian Dior, Tiffany & Co, TAG Heuer and many others?”
you would be right
However, among the many brands is Starboard Cruise Services, a company that is working Shopping centers and shopping zones on board cruise ships. Based in Doral, Fla., Starboard is part of LVMH’s Selective Retailing segment, which includes Sephora and DFS, the duty-free giant.
As stated on Starboard’s website, the company operates on more than 90 cruise ships worldwide, provides retail services to 10 cruise lines, including the Big Three, and employs more than 1,500 associates on those cruise lines.
In the first half of 2022, LVMH’s Selective Retailing business generated sales of 6.63 billion euros (US$6.83 billion), versus 5.09 billion euros (US$5.25 billion). However, that’s just 18% of LVMH’s total revenue.
Why take a risk on a stock when you can own shares in a luxury conglomerate controlled by Bernard Arnault, the world market third richest person?
Year-to-date (YTD) down 14%, it has an earnings yield of 3.86%higher than since 2018. Long term, it’s a home run.
Expedia (NASDAQ:EXPERIENCE) is an online travel shopping company. If you have somewhere to travel or to stay overnight, Expedia will help you organize and book all your travel details.
When it comes to cruises, the company has Expedia Cruises to get you on board and travel to destinations worldwide. While Expedia doesn’t break down revenue for its cruise business, zoom info estimates its annual turnover $515 million. That would make some sense since it’s generated $8.6 billion in total sales in 2021.
In 2020, Expedia Group launched an omnichannel strategy for Expedia Cruises, bringing all cruise content together on one website, allowing travelers to research and book their cruise either independently online or through one of their franchise agents.
“We have a strong focus on cruises and that is a long-term focus for us. We want to be leaders in digital experiences and content, leaders in offering and transparent pricing, leaders in service and travel management…” PhocusWire reported Greg Schulze, Senior Vice President of Transport and Cruise at Expedia Group, saying in June 2021.
On August 5th EXPERIENCE stock jumped on Expedia’s top and bottom line beat in its latest earnings report. Total revenue increased 51% to $3.2 billion compared to Q2 2022 and 1% compared to Q2 2019. Business is back to pre-pandemic levels or close enough.
Down 40% YTD, it’s a buy.
Cruise Stocks to Buy at Dip: Defiance Hotel, Airline and Cruise ETF (CRUZ)
A nod to the name of the only U.S.-listed Exchange Traded Fund (ETF) that invests in cruise stocks as part of its theme. I chose those Defiance ETF for hotels, airlines and cruises (NYSEARCA:CRUZ).
CRUZ makes sense for investors who don’t want to risk their hard-earned capital on a single stock, thereby reducing corporate risk in their investment.
As you may have heard, on July 13th Tidal ETF Services LLCthe founders of SonicShares Airlines, Hotels, Cruise Lines ETF announced that it shut down the travel-focused ETF. It was launched in June 2021 and lasted just over a year.
CRUZ started around the same time. It’s almost accumulated 40 million dollars in total net worth over the past year. Considering what the pandemic has done to all three of these industries, it’s actually a decent haul. Investors should expect all three to be successful for years to come.
The big three are weighted at 5.67% (CCL), 4.06% (RCL) and 3.19% (NCLH). All three are in the top 10 stocks, giving you significant exposure to the cruise lines while also providing diversification, which is also important.
With a nearly 21% decline in 2022, it doesn’t fare nearly as badly as Carnival and its peers.
At the time of publication, Will Ashworth held no position (neither directly nor indirectly) in any of the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publicity guidelines.