Casinos & Hotels
Why There Is Smooth Sailing Ahead for Carnival
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Lots of issues have sunk Carnival Corp. (NYSE: CCL) shares this year by 10%, ranging from worries about the Zika virus to actual illness of passengers from the norovirus on the Carnival Sunshine. Many on Wall Street, though, believe there is plenty of smooth sailing ahead for the stock.
First, cruising is a solid, cost-effective product. It’s the best way for vacationers to experience multiple destinations in places like the Caribbean and Europe. Essentially, the ship is like a floating hotel with all-you-can-eat buffets and all the booze you can afford. Carnival, which ferries 47% of cruise ship passengers through its nine brands, should continue to benefit from an improving job market and low oil prices.
The company’s problems also need to be looked at in context.
Norovirus is awful for those that experience it, but keep in mind it’s not the bubonic plague. It’s a bug that doesn’t usually require treatment and affects less than 1% of all cruise ship passengers. Carnival is well-versed in handling these outbreaks when they occur. Of course, on those rare occasions when it becomes a serious issue, the company will cut the cruise short and head back to port. However, that’s the exception rather than the rule.
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