Top Cruise Line Stocks for 2023

Cruise line companies are seeing a strong rebound after years of COVID-related setbacks, with passenger booking rates up industry-wide. Still, just one stock—Royal Caribbean Group—has outperformed the broader market in the last year.

Royal Caribbean shares are up about 42% in the last year, while the benchmark Russell 1000 Index is up just over 1%. All other cruise industry stocks have lost value in the past year, a sign there could still be room for further recovery.

Below, we look at the top cruise line stocks for 2023 based on best value, fastest growth, and best performance. The Russell 1000 benchmark figure above is as of May 29, while all other data throughout are as of May 23.

Best Value Cruise Line Stocks

These are the cruise line stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business's value. A business with higher sales could eventually produce more profit when it achieves (or returns to) profitability. The price-to-sales ratio shows how much you're paying for the stock for each dollar of sales generated.

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• Carnival Corp.: Carnival operates the world’s largest fleet of cruise ships. The company also owns travel-related properties such as hotels and vacation destinations. Carnival shares have fallen 16% in the last year while revenues nearly tripled for the first quarter of the year as a result of surging demand post-pandemic.
• Norwegian Cruise Line Holdings Ltd.: Norwegian Cruise Line operates a fleet of passenger cruise ships. In addition, the company offers itineraries and theme cruises. Norwegian's revenue more than tripled for the first three months of the year as it ramped up cruise voyages again following COVID-19.
• Lindblad Expeditions Holdings Inc.: Lindblad Expeditions owns and operates cruise ships and provides expedition cruising and travel services. The company offers both sea-based and land-based expeditions. Lindblad shares have plunged by 22% in the last year, making it among the worst-performing cruise line stocks that we looked at.

Fastest Growing Cruise Line Stocks

These are the cruise line stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors to identify companies that are able to grow revenue organically or through other means and to find growing companies that have not yet reached profitability.

In addition, accounting factors that may not reflect the overall strength of the business can significantly influence earnings per share (EPS). However, sales growth can also prove to be potentially misleading about the strength of a business—growing sales does not guarantee a company will eventually become profitable.

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• Norwegian Cruise Line Holdings Ltd.: See company description above.
• Carnival Corp.: See company description above.
• Royal Caribbean Group: Royal Caribbean Group, formerly known as Royal Caribbean Cruises, operates either directly or through joint ventures a fleet of 64 ships with a total capacity of 150,000 berths. Total revenue almost tripled in the most recent quarter, driven by rebounds in both passenger ticket sales and onboard revenue.

Cruise Line Stocks With the Best Performance

These are the cruise line stocks that had the highest returns or smallest declines in total return over the past 12 months out of the companies we looked at.

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• Royal Caribbean Group: See company description above.
• Norwegian Cruise Line Holdings Ltd.: See company description above.
• Carnival Corp.: See company description above.

Advantages of Cruise Line Stocks

Shareholder Perks: A little-known benefit of holding cruise line stocks is that they offer shareholder perks. For instance, investors who hold at least 100 Carnival shares are entitled to a $250 onboard credit for cruises that are 14 days or longer, a $100 credit for cruises between 7 and 13 days, and a $50 credit for sailings of six days or less. Similarly, both Royal Caribbean and Norwegian Cruise Line offer comparable shareholder benefits. To claim these benefits, investors need to provide proof of ownership, such as a shareholder proxy card or a copy of a current brokerage statement.

Pent-Up Demand: Cruise line companies have seen a rebound in demand as customers book cruises they had put on hold during COVID-19. This positions operators in the sector to boost profits as fleets are back at total capacity with reduced COVID requirements. In March 2023, for example, Carnival Cruise Lines said it had reached record future bookings.

Risks of Cruise Line Stocks

High Debt Load: Cruise line companies racked up substantial debt over the past several years to stay afloat during the pandemic. With inflation leading to higher fuel costs and rising interest rates, these elevated debt levels will become increasingly difficult to service, increasing the risk of the companies offering new shares to raise capital, thus diluting the stakes of current shareholders.

Future Pandemics: Cruise Line stocks sank during the pandemic, with the sector facing multiple challenges from bad publicity, no-sail orders, and a sluggish recovery. In the early stages of the health crisis, reports of major outbreaks spreading onboard put downward pressure on the group. Selling accelerated as the Centers for Disease Control and Prevention (CDC) issued and extended no-sail orders. Although forward bookings have bounced back, these challenges remind investors that future pandemics remain a risk for cruise line stocks.

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As of the date this article was written, the author does not own any of the above stocks.