Ready to dock your investable capital in assets with plenty of upside potential? Sure, there are risks involved with Miami-headquartered cruise-line operator Carnival (NYSE:CCL). Nevertheless, CCL stock could sail much higher as, according to Carnival’s chief executive, America’s vacationers are “happy to get on with their lives” in 2023.
Carnival CEO Josh Weinstein is, of course, referring to the Covid-19 pandemic. That, along with flu season, has struck fear in the hearts of travelers and cruise-stock investors alike. Will there be any relief this year?
Obstacles, including the rising costs of food and fuel, could make Carnival’s path back to pre-pandemic profits challenging. Still, bookings data suggests the possibility of a return to normal — or at least, a modified “new normal” — as Carnival demonstrates slow but steady operational progress.
What’s Happening With CCL Stock?
Frankly, Carnival’s loyal shareholders can be optimistic, but they also need to be realistic. CCL stock isn’t likely to reach its late-2019 $50 price level anytime soon. It’s fine to keep $50 in mind as an eventual, multi-year target, though.
Let’s see if the Carnival share price can stay above $10 throughout the year. The shares traded above $20 a year ago, so $20 is a reasonable intermediate-term goal. Besides, doubling your money on an investment would be a worthy achievement.
If anything can hold Carnival back, it’s the rising costs of food and fuel. During 2022’s fourth quarter, Carnival’s food expenses more than doubled year-over-year to $277 million. Meanwhile, the company’s fuel costs rocketed higher in Q4 2022 to $580 million.
Those data points reflect last year’s elevated inflation, however. If inflation eases in 2023 compared to last year, Carnival’s upcoming quarterly reports could offer some nice, positive surprises.
Carnival’s Booking Volumes Point to a Recovery in the Making
Some folks prefer to look at revenue and profits, but booking volumes can provide deeper insight into the financial health of a travel business. In Carnival’s case, fortunately, the company’s bookings volume data indicates a possible return to pre-Covid-19 numbers.
Carnival’s update states, “Booking volumes during the fourth quarter of 2022 for 2023 sailings are nearing 2019 comparable booking levels.” Not only that, but November booking volumes exceeded levels from 2019.
CCL stock investors should be relieved to hear that Carnival is approaching and even exceeding pre-pandemic booking volume figures. Perhaps this gave Weinstein the confidence to assure investors during a conference call that trends “are going back to normal about how people are thinking about those types of illnesses.”
What You Can Do Now
Covid-19 hasn’t completely gone away, of course. Plus, there’s flu season to contend with. Yet, it appears that people are booking Carnival cruises for 2023 in large numbers, even comparable to what was seen in 2019.
That’s encouraging, and Carnival should benefit if inflation cools and the prices of food and fuel come down. Therefore, while CCL stock is certainly risky, it’s worthwhile to buy and hold a few shares. Don’t expect a complete return to “normal,” but prepare for Carnival shares to eventually double from their current price.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.