Breakouts can be really powerful. While megacap Nvidia has been moving sideways since October, three cruise stocks, including Carnival, have rallied after strong breakouts.
These cruise stocks started to rally in September or October and climbed further with the Trump trade, trouncing the S&P 500. The Investor's Business Daily's Stock Screener also shows that the trio (Carnival has two types of stock) has relative strength lines at a new highs.
But, going by basic investing rules, it may be time to take some profits off these stocks.
Carnival had rallied 33% as of Friday after breaking out of a cup with handle base with a buy point of 19.09. That is over and above the 25% profit target at which investors can start selling their position.
Carnival holds a Relative Strength Rating of 94 and its Composite Rating is an ideal 99. Third quarter sales rose 15% to $7.9 billion, while earnings of $1.27 per share showed a 48% increase year over year.
ADRs of Carnival, which trade under the ticker symbol CUK, have rallied as well. Shares broke out of a cup with handle with a buy point of 17.38 Oct. 9 and have gained more than 30%, according to IBD MarketSurge.
Royal Caribbean rose to an all-time high on Monday. Shares broke out from a cup with handle's 169.47 entry in September, about seven weeks ahead of third quarter results. IBD MarketSurge shows that the relative strength line is at a four-year high. Shares have rallied past their 25% profit zone and had gained 44% from the buy point as of Friday's closing.
Sales rose 17% to $4.9 billion while earnings of $5.20 per share increased 35% from the prior year. The company raised its full year earnings guidance to $11.60 at the midpoint. For the fourth quarter, the company noted it expects per-share earnings of $1.43, also at the midpoint, after factoring in a hit from Hurricane Milton.
For all three stocks, the relative strength line, which compares the stock to the S&P 500 has been heading steadily higher after the stocks' breakouts. That shows that all three have been outperforming the index. But it may be time to take profits.
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