[On :Freetrade:] Carnival (CCL) 🚢 🌴

No thread for Carnival but interesting enough to make one!

So Carnival’s had a pretty sh!t year.

Owner of P&O Cruises, AIDA and Princess lines. Around 60-70 ships in operation, massive refurb project happening across the older ships. Bookings reported as strong. Now sporting a near 5% dividend yield.

Seems to have been hit by multiple short term issues, a port closure in Cuba at peak times, a rise in fuel costs and now Coronavirus.

Potential buy the dip candidate or falling knife?

Looks good on the surface @anon810895. I love health, banks and travel. They’ll be around and if one company fails invest in the sector. Untraveled regions like Africa will do more and more in the next few years as they (hopefully) become more prosperous

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I have no holiday/travel companies. I’m thinking this might be a good first go! Price is very attractive.

The 5 year graph is telling.

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I’m quite highly exposed to Carnival. Bought shares last year because after looking at them, I thought they looked undervalued. Long story short - they’ve kept going down since.

Intitially I bought in the dips because I thought the fundamentals were still sound and that they would rebound to a certain extent. Unfortunately for me, there were so many dips that I had to stop because if I kept buying my portfolio would be unbalanced and I would be overexposed.

They do seem to have been a lot more vulnerable than I expected to what turned out to be many, many different things.

Oil is an obvious one, they were affected by rising oil prices because of their fuel costs.

But things like Trump being an arse over Cuba, and various turmoil over the world had much more of an effect than I expected. Just takes one port that they can’t stop at for a period and the shares take a hit.

The Coronavirus was just the latest unpleasant surprise.

There does seem to be a slight paradox in that while they are persuading more people to buy cruises, they’re paying less for them, so customer numbers are almost a red herring as the profit chart isn’t showing the same growth.

Carnival are also more exposed to issues affecting the cruise industry than you might expect because of their surprise - as well as the headline Carnival brand, they also own Holland America, Costa, Aida, P&O Cruises, Princess, Seabourn, and Cunard.

As it stands, I can’t justify increasing my investment in them. If I was starting from scratch at this point? Possibly, but as the 5-year graph indicates, it’s potentially risky.

Fundamentally I think they are still undervalued - but the problem seems to be that the market consistently continues to undervalue them and shows no sign of correcting.

(For sake of disclosure, I have sailed on Carnival, P&O, and Cunard in the past, of the Carnival brands.)

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Not getting much better!

From £31 to £26 in three weeks.

Carnival stock hasn’t been this low since 2014.

The coronavirus effect has been much worse than I feared. The Diamond Princess situtation has been an absolute disaster (Princess Cruises are owned by Carnival), and the whole sector looks set to suffer for the rest of the year as people are put off travelling.

The question I keep asking - but cannot answer - is, has Carnival stock reached bottom, or is there further to fall? While I hope for the former, I fear the latter; Coronavirus effect will be ongoing, will add costs, and bookings are likely to be down because of people fearing to travel - it has been suggested by at least one cruise journalist that lines will struggle to fill ships this summer and passengers will effectively be able to name their price. :astonished:

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Sven’s had a look:

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Might see Carnival drop further today because of this:

Has anyone looked at the fundamentals and willing to share?

Watch the video I linked above.

Sven goes into it pretty deeply.

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The ticket price is only part of it. If you are on a cruise, you are effecively stuck on boat with nowhere to go and nothing to do, so people eat, drink massively marked up food, gamble / play arcades etc.

Some routes will even make a small loss on the ticket but will have more “paid for” activities, no included freebies like food/drink etc.

TUI and Carnival have seen their shares sink sharply since the middle of this month as worries about the effects of the coronavirus outbreak have hit the travel sector particularly hard.

TUI’s market cap currently sits at just over £3.6bn and Carnival’s at around £3.7bn, smaller than a dozen of the stocks at the top end of the FTSE 250.

Looks like Carnival will be out of the FTSE 100 at this rate.

Kingfisher, 109th with a market value of under £3.9bn, Morrison, at 106th with a value of just over £4bn, and Meggitt (LON:MGGT), 104th at £4.1bn, are all in distinct danger of the drop, with Pearson (LON:PSON), DS Smith (LON:SMDS), Centrica (LON:CNA), Sainsbury’s (LON:SBRY) and easyJet (LON:EZJ) all flirting with relegation.

Top of the FTSE 250 and primed for promotion is asset manager Intermediate Capital Group (LON:ICP), followed by silver miner Fresnillo Plc (LON:FRES), housebuilder Bellway (LON:BWY), bookmaker GVC Holdings (LON:GVC) and water company Pennon Group (LON:PNN), all valued at above £4.5bn.

Not far behind, Derwent London (LON:DLN), Direct Line (LON:DLG), Unite Group (LON:UTG) and ConvaTec Group (LON:CTEC) will be hoping for some momentum in their shares to push them up into the coveted FTSE 100.

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Prof Galloway likes Carnival. You may have seen this YOLO chart:

“The cruise industry is the fastest-growing segment in the leisure travel market with demand increasing 62% between 2005 and 2015. And cruisers just want to keep on cruising. 92% of cruisers will book a cruise as their next vacation.”

Carnival is dual listed - historical stock prices on NYSE - so YOLO:

This is not an investment advice.

:passenger_ship:

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Carnival battered again. Every time I go to pull the trigger, I think I’ll wait just one more day…

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I sold my Carnival position a while back, because I feared it had further to drop, while also setting a target for buying back in.

Dropped below that target today, so I bought back in. Ended up with more a lot shares for almost the same money (given the buy rounded down). Then they lurched down a bit more again :grimacing:

Long term, I’m in a better position than I was before, having more shares now. But I am left trying to figure out where Carnival’s bottom is now. Do I put more money in if they dip to £14? £12? Or are they going to dead cat bounce all the way down to a much lower floor?

That the US government is now actively discouraging people from taking cruises probably didn’t help.

Statistically speaking, chances are I will miss the bottom. But I’m ok with where I am now. I think I’m close enough that 5-10 years from now I’ll be back up again.

(Am balancing my position in Carnival by also making sure I’m putting a decent amount in to less risky investments. DYOR. Don’t take anything I’ve said as advice. Do think about booking a nice cruise holiday or two once all this blows over :sweat_smile:)

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I’ve been watching them for ages too. Each time like you I thought nah this isn’t the time! I’m prepared to let this one get away. I’m not sure where the bottom is. Unlike most businesses if this virus doesn’t stop nobody will be sailing on cruises and the cash needed to keep these ships going is enormous.

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Sail away, come on Ben!

Same. I don’t mind jumping in and it drops a few quid. But I don’t want to jump in and it halves.

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This comment actually made me laugh :sweat_smile:

I’m getting fed up of buying dropping knives. I keep doing it.

So that means I’ll probably catch a dead cat bounce instead…

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I can’t blame you for being cautious. Usually the rule is that stocks drop down fast and climb up slowly. So, even if you miss the bottom, even if you dodge the dead cat bounces, you could buy late and still make gains in the long term.

I do believe that long term the virus will flame out (or a less severe form will become endemic) (see: Spanish flu), and once that happens people will develop short memories and start cruising again. I also believe Carnival are able to ride out the rough period between now and then, even if it gets painful. That said, I’d probably still rank them as my riskiest investment at this point in time.

Personally, having done a cruise myself, I couldn’t think of anything worse than being quarantined in a cabin for two weeks. The thought absolutely terrifies me and I would never travel this way again and I’m sure it will put many people off.

This article also covers REITS which has been discussed on another thread.

https://seekingalpha.com/article/4329501-coronavirus-2-high-yield-opportunities-and-1-stock-to-avoid

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