NCL Stock. Coming back up?

[negc]

I do buy individual stocks, but if I knew how to predict stock movement over a ten year period, I'd be cruising on my yacht now with a nice drink in my hand, served by a young hottie in a Speedo. (To be fair, I guess we'd also have a Hooters girl aboad to serve DH his drinks....) :)

 

Yogimax has a very good point in that the jury's still out on whether RCL's megaships will pay off over time. I've heard rumors that they aren't filling Oasis now, but they're only rumors and I haven't seen big dramatic price drops, so I really don't know how difficult it is to fill the big ships. Oasis and Allure are destination ships in themselves, and they are too big for many ports, so the bookings seem to be coming from cruisers for whom the ports are less important than the ship experience. Whether this is a novelty or a trend is hard to predict. Will people cruise once on Oasis, or will they keep coming back because they love the ship?

 

I saw something on the Travel Channel awhile back that I found interesting - for cruise ships to make a profit, they must sail at full capacity and every single passenger has to spend an average of about $10 per day on stuff not included in the basic cruise fare. The fares we pay to cruise just gives them a break even scenario, assuming the ship is filled. The real profit maker is bar drinks. Now I know I'm inclined to have a mojito or two every day on a cruise, so they're getting that revenue from me, and I've seen enough s*%tfaced drunks on ships to know that some folks contribute a lot more than 10 bucks a day to the bottom line, but the children on any given ship don't buy drinks and many cruisers don't spend much on alcohol. There are other money makers of course, like excursions, shops, spa, etc., but the question is how much each passenger is willing to spend on board on a daily basis.

 

So any cruise line has to have adept bean counters in charge to make it work. I don't see huge differences in the business models, and as NEGC pointed out, fixed costs will affect both corporations in the same way. The big question is whether one line can outshine/outmarket the other in drawing the most passengers, enjoying more loyalty from repeat customers, and keeping the berths filled. I think Yogi is right and the two stocks would likely be pretty lock step.

Judy

 

Just a caution to beware of rumors, positive or negative about any cruiseline. Unless you know the person who started the rumor and know that they don't have an ulterior motive for their statements, citing such rumors only serves to spread them and in time they take on a life of their own and the truth can never catch up.

I believe that both Carnival and RCI ships generally sail at greater than 100% capacity, but for the exact percentages one should check each corporation's annual reports.:)

[foxgoodrich]

Yes, they both do report sailing at 100+% capacity, but the question is at what cost? During the high demand summer season, ships can be filled without much discounting. For the other 2/3 of the year, filling ships involves more discounting. If they have to drop the pp price by 100 bucks to fill the last 500 berths, they begin a cruise with a $50k deficit in ticket revenues that must be made up in onboard concessions just to get to the break even point. And there's the rub, since onboard concession numbers have been declining since 2007 (per annual reports).

 

And you're quite right - rumors are only rumors and speculation is just speculation. My source on the Oasis was passengers (family) who were easily able to change cabins and get upgrades at the terminal because cabins were available when they checked in. Also the captain on our March cruise alluded to several less than full sailings on Oasis during a question and answer session at the welcome back event. I haven't been on Oasis myself, though I would like to try one of the mega ships.

 

20/20 hindsight is so easy with stocks. Don't we wish we'd bought 'em a year or so ago and sold 'em a couple of weeks ago!

Judy

[yellowsnow]

Well... after seeing that train wreck at the stock market today I think I will wait a little bit longer to buy.

[The_Big_M]

but the children on any given ship don't buy drinks and many cruisers don't spend much on alcohol.

 

Many children are in the 3rd+ positions of a cabin though, thus filling the overcapacity. Thus, as they're not part of budgeted capacity, that is cream for the profits itself, and not required as part of onboard alcohol/extras spending.

[Ocean Boy]

Many children are in the 3rd+ positions of a cabin though, thus filling the overcapacity. Thus, as they're not part of budgeted capacity, that is cream for the profits itself, and not required as part of onboard alcohol/extras spending.

 

I am not sure about budgeted capacity. The show on CNBC on NCL said that the cruise lines like to see the ships sailing at 110% capacity. SO it could well be that they budet for over capacity.

[The_Big_M]

I am not sure about budgeted capacity. The show on CNBC on NCL said that the cruise lines like to see the ships sailing at 110% capacity. SO it could well be that they budet for over capacity.

 

Reports are prepared on the basis of 100%. While everyone likes more revenue/sales, it can't be the basis of their plan.

[mtchg]

because so far you all have been HEDGING (pun intended) on my original question.So let's narrow the parameters.

 

There is only ONE stock between RCCL/CCL that you can buy...and you MUST depart with the money for 100 shares of one or the other.....but you cannot touch the stock for 10 years.....if you must choose ONE stock...and you must choose...which one??

 

 

Mitch

[yogimax]

because so far you all have been HEDGING (pun intended) on my original question.So let's narrow the parameters.

 

There is only ONE stock between RCCL/CCL that you can buy...and you MUST depart with the money for 100 shares of one or the other.....but you cannot touch the stock for 10 years.....if you must choose ONE stock...and you must choose...which one??

 

 

Mitch

 

You might want to change your question to a fixed dollar amount rather than a fixed share amount. Given the question as stated, the answer is CCL, since the greater dollar amount and a positive return will result in a greater overall profit.

[mtchg]

You might want to change your question to a fixed dollar amount rather than a fixed share amount. Given the question as stated, the answer is CCL, since the greater dollar amount and a positive return will result in a greater overall profit.

 

Fair enough....you have $1,000 dollars to spend on one OR the other; can't touch it for 10 years; which one do you invest in.

 

Mitch

[negc]

You might want to change your question to a fixed dollar amount rather than a fixed share amount. Given the question as stated, the answer is CCL, since the greater dollar amount and a positive return will result in a greater overall profit.

 

Anyone on these boards who can accurately predict what the relative value of either company will be in ten years has clearly missed their calling. Carnival stock is currently selling for more than RCI stock. If both grow by the same percent, you will get more money from the sale of CCL stock in ten years but not a greater profit (if figured by percentage).

[Gonzo70]

Fair enough....you have $1,000 dollars to spend on one OR the other; can't touch it for 10 years; which one do you invest in.

 

Mitch

 

Sorry, but I got to hedge on my answer again. :D

 

I would NEVER buy a stock that I could not touch for 10 years. With individual stocks, one needs to frequently reassess the company's future prospects. One needs to be prepared to exit at any time, or to add to the position if the situation warrants. A lot can change in a ten year window.

 

If one is going to invest in either CCL or RCL, the biggest factor (IMHO) should be risk tolerance. CCL is safer than RCL, but RCL has a bigger chance at a greater return (though also a bigger chance to crash and burn).

[mtchg]

you HAVE to choose ONE in this game...we won't look you up in ten years to check up on you.

 

Ok...amateur that I am, I will choose Carnival; I think they just have a more successful business model and will continue to on balance gain; I think Royal Caribbean is at some modest risk right now which does not bode well for the future. Anyone disagree?

 

 

Mitch

[ltbw038]

Dividends are only taxed at the 15% rate however, far better than ordinary income for most people. From a chartist's point of view, Rcl's stock' s the better buy.

From a fundemental point of view, based on growth prospects, I have to disagree with the previous posts. Rcl is growing at a faster rate than carnival.

 

 

RCL CCL

Forward p/e 15.4 15.4

PEG Ratio .7 1

Growth rate 20.9% 15.2

 

Al that said, RCL is not usually a stock to look at for a quick trade. When it was in the single digits and teens it was a great buy.

[ltbw038]

Sorry, but I got to hedge on my answer again. :D

 

I would NEVER buy a stock that I could not touch for 10 years. With individual stocks, one needs to frequently reassess the company's future prospects. One needs to be prepared to exit at any time, or to add to the position if the situation warrants. A lot can change in a ten year window.

 

If one is going to invest in either CCL or RCL, the biggest factor (IMHO) should be risk tolerance. CCL is safer than RCL, but RCL has a bigger chance at a greater return (though also a bigger chance to crash and burn).

Well said, buy and die investing has been out since the 70s

[yogimax]

Fair enough....you have $1,000 dollars to spend on one OR the other; can't touch it for 10 years; which one do you invest in.

 

Mitch

 

o.k., I'll go first... CCL

 

Why?

 

CCL currently pays a dividend while RCL does not.

 

If you reinvest your dividends over the ten year period, you should come out slightly ahead because the reinvested dividends will benefit from dollar cost averaging.

[ltbw038]

If you reinvest the dividend, CCL would probably beat RCL. But if you compare the growth rates, CCL is projected to earn 2.48 in 2011 and RCL 2.11. At a modest pe of 15, that would put RCL at 31.65 and ccl at 37.2.

 

If you take it out to 2015 RCL would be at 67 and CCl at 74. The question is how sustainable the long term growth rate is. In 2017 RCL's earning surpass CCL.

 

By investing a thousand dollars in either stock, RCL is worth more than CCL including the dividend in 2011. If growth remains constant, then RCL would be worth 2345 in 2015 and CCL 2072. Hmmmmm

[negc]

If you reinvest the dividend, CCL would probably beat RCL. But if you compare the growth rates, CCL is projected to earn 2.48 in 2011 and RCL 2.11. At a modest pe of 15, that would put RCL at 31.65 and ccl at 37.2.

 

If you take it out to 2015 RCL would be at 67 and CCl at 74. The question is how sustainable the long term growth rate is. In 2017 RCL's earning surpass CCL.

 

By investing a thousand dollars in either stock, RCL is worth more than CCL including the dividend in 2011. If growth remains constant, then RCL would be worth 2345 in 2015 and CCL 2072. Hmmmmm

A lot of "ifs" involved which might or might not occur. :rolleyes:

[ltbw038]

A lot of "ifs" involved which might or might not occur. :rolleyes:

 

All investing is "if's". Show me a company where earnings and growth are set in stone.

[negc]

All investing is "if's". Show me a company where earnings and growth are set in stone.

Of course it is, but your scenario certainly isn't set in stone and when you project what will happen 10 years out things are even more uncertain, though your language would seem to imply differently.:rolleyes:

[ltbw038]

Of course it is, but your scenario certainly isn't set in stone and when you project what will happen 10 years out things are even more uncertain, though your language would seem to imply differently.:rolleyes:

 

Actually the projections are from Credit Suisse. I have no particular bias, I bought a good deal of RCL at 8 and sold from the mid twenties to 30. At present growth rates RCL can be expected to outperform.

[negc]

Actually the projections are from Credit Suisse. I have no particular bias, I bought a good deal of RCL at 8 and sold from the mid twenties to 30. At present growth rates RCL can be expected to outperform.

 

Congratulations, that was clearly a good move. But whoever made the projections, the operative words are "at present growth rates" and that is at best " an educated guess" on the part of Credit Suisse. :)

[ltbw038]

No doubt, and that's why I qualified the statement. Here are some interesting rear view mirror stats.

And we’ve been here before of course, quite precisely right here, many times before…

14 Apr 1998 7 Nov 2001 13 Jul 2004 31 Dec 2009 19 May 2010 (current)

(Thursday) (Wednesday) (Thursday) (Thursday) (Wednesday)

SPX: 1115.75 1115.80 1115.14 1115.10 1115.05

Source: Oppenheimer Asset Mgmt. & Thomson Reuters

 

So when it comes to trying to buy a company looking out 10 years, an active management style is probably better than a 10 year buy and hold.

 

But thats my humble opinion.