With passenger volumes at Transportation Security Administration checkpoints now exceeding pre-pandemic levels and expected to spike this summer, Royal Caribbean joins several travel stocks on the IBD 50. And as rival Carnival navigates rough seas, RCL stock continues to weather the storm and test a new buy zone.
In addition to landing a spot on the IBD 50 list of top growth stocks, Royal Caribbean has sailed onto the IBD Breakout Stocks Index.
Over the last three quarters, the cruise ship operator has generated average sales growth of 297%. Ranging from 172% to 555%, that actually marks a slowdown from the prior three quarters that saw even more massive growth as pent-up demand for travel rebounded from the coronavirus lockdowns.
RCL stock scores a 91 Composite Rating, clearly exceeding the 50 score of rival CCL stock. Royal Caribbean leaves Norwegian Cruise Line, which earns a 46 Composite Rating, even further behind in its wake.
See Who Joins RCL Stock On The IBD Breakout Stocks Index
Royal Caribbean Revenue Sailing While Cruising Toward Profits
One of the world's leading cruise companies, Royal Caribbean has a global fleet of 64 ships traveling to about 1,000 destinations worldwide. Its cruise brands include Royal Caribbean International, Celebrity Cruises and Silversea Cruises. The company also owns a 50% stake in a joint venture that operates TUI Cruises and Hapag-Lloyd Cruises.
While sales growth has been explosive, profits remain elusive. But Wall Street sees an earnings turnaround on the horizon.
Although based on a comparison with the prior-year quarter that showed a loss, analysts' forecast comes out to 169% EPS growth in Q2. For the full year, consensus estimates call for 159% earnings growth, albeit compared with a loss in 2022.
In 2024, analysts are looking for a 52% gain to $6.67 a share.
In a sign of technical demand, RCL stock sports an A- Accumulation/Distribution Rating and a 1.2 up/down volume ratio.
RCL Stock Floating In Buy Zone After 15.6% Jump
While CCL stock tries to set up and NCLH continues to face headwinds, Royal Caribbean has set sail for a new breakout move.
RCL stock soared 15.6% in heavy volume the week of May 5 as it reported earnings. Its relative strength line spiked toward a new high as the stock vaulted above its 10-week moving average.
Royal Caribbean added to that big weekly gain and cleared a 76.40 buy point in a cup pattern before dipping below that entry in light volume.
Refusing to give back its huge post-earnings gains, RCL stock has cruised back into buy range. It now trades 1% above the buy point.
In a further sign of rebounding technical strength, the 21-day exponential moving average has shot back above the 50-day line.
While Carnival and Norwegian Cruise Lines are not currently as technically strong as Royal Caribbean, both NCLH and CCL stock have climbed back above their 10-week lines. See if they can hoist their mainsails and keep rising in strong volume.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
