Despite choppy waters, RCL Stock is ready to set sail

  • Royal Caribbean Cruises stock has still not returned to pre-Covid-19 pandemic levels.
  • At the same time, the company is marking important milestones in returning to full operations.
  • Investors should consider an investment, but be patient as progress won’t happen overnight.

Based in Miami, Florida., Royal Caribbean Cruises (NYSE:RLC) is known worldwide for providing leisure travel across oceans and seas. Yet owning RCL shares has not always been a pleasure trip, to put it politely.

As soon as there is progress, something happens that deals a blow to the cruise industry. Among the most prominent examples are the delta strains and, more recently, the omicron variant of Covid-19.

Yet Royal Caribbean is still operational and there could be a great investment opportunity here. Patience will be key as RCL stocks are not necessarily going to revisit 2019 levels anytime you want them to.

Meanwhile, Royal Caribbean is showing progress despite continuing challenges. Check the data and you might be convinced to buy and hold some stocks for the long term.

RLC Royal Caribbean Cruises $75.63

What’s going on with RCL Stock?

When RCL stock hit $135 in January 2020, few of us could have imagined the crash that was soon to occur. Indeed, the stock price’s drop to $24 was shockingly quick.

There was a partial recovery, but it tested the patience of shareholders. At least we can say that Royal Caribbean’s stock price has recovered $75 and the company’s market capitalization is back up to $19 billion.

Among the biggest obstacles are the regulations imposed by the Centers for Disease Control (CDC). These regulations are probably necessary to protect public health. However, they have undoubtedly also reduced the profit potential of US-based cruise lines.

Recently, however, the CDC cleared its conditional sail order expire. Previously, in order to retain their ships, cruise lines had to follow a set of rules imposed by the conditional sail order.

Now that the order is not active, Royal Caribbean can operate under a voluntary agreement with the CDC. Additionally, the CDC’s risk warning for people taking a cruise has been lowered from Level 4 (very high risk) to Level 2 (moderate risk).

A return to significant progress

Even before the CDC cleared its conditional sail order to expire, Royal Caribbean Cruises was making progress in getting its ships moving again.

Consider This: By the end of 2021, Royal Caribbean had returned 50 of its 61 ships in operations. This represented more than 85% of the global fleet capacity.

This was achieved despite the emergence of the omicron variant last year. Additionally, a major milestone was reached when Royal Caribbean bookings recently returned to pre-omicron levels.

Looking ahead, Royal Caribbean expects to “return the entire fleet before the 2022 summer season”, as well as “to have positive operating cash flow by late spring”.

Overall, Royal Caribbean Group Chairman and CEO Jason Liberty sees 2021 as “significant progress towards our recovery.”

The company’s bookings in the fourth quarter of 2021 were sequentially higher than in the third quarter. So, we can see signs that “meaningful progress” is being made.

The essential

The watchword today is “progress”, not perfection.

Holding RCL stocks probably won’t get you rich in a day or two, but the path back to pre-Covid-19 levels is becoming clearer.

The sea will be choppy and there will be obstacles, so be prepared for some volatility along the way. If you’re willing to accept that, then a long-term position in Royal Caribbean is definitely worth considering.

As of the date of publication, David Moadel had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to Publication guidelines.

David Moadel has delivered compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga and (of course) He is also the Chief Analyst and Market Researcher for Portfolio Wealth Global and hosts the popular YouTube financial channel Looking at the Markets.


Comments are closed.