Keith RichardsCarnival Corp.CCLHOLDSep 06, 2017

They report Thursday. CCL tends to report weaker cruise numbers than its peers. He expects analyst upgrades no matter what.

This is one to own with a short time frame in mind. There is some concern with debt but it is being dealt with. If you own 100 shares of the company you can get a discount on cruises.

The cruise line business bounced back well this year after Covid. It may not be able to increase its pricing this year. The next quarter may be slower but the next year overall should be decent.

A month ago reported strong top and line beats based on strong bookings, but shares fell 5%, probably because management cut EBTIDA full-year cost due to higher fuel costs. Didn't the market know that? People love to cruise, so there is tremendous demand.

Cruise line sector suffered during Covid-19 which increased debt & equity.
Vert diluted share base.
Interest rates hard on debt levels.
Hard to earn profits with cyclical nature of business.
Does not invest in sector.
If economy enters recession, will impact profits.

Pullback is an opportunity. Will probably hang around $15 level for a while. Lots of people are going back into the swing of vacations, and he thinks it will continue. No dividend.

Cruise lines have all done well because travel is booming. He'd pick RCL, but thinks they'll all do well. Q3 is generally the industry's best quarter. Run up a lot already, so may see a pullback after Q3. Pent-up demand might even last into 2024.

From a momentum standpoint the stock looks good, more than doubling this year and with a big jump in earnings expected in 2024. However, debt, at 31X cash flow, still makes us wary overall. To survive covid the sharecount nearly doubled since 2019 as it issued shares for capital. Going into a possible recession, we would still be cautious here overall. The easy money on the recovery has probably been made now, and it may be more challenging going forward. 
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It has had a downtrend, consolidation and breakout. There is lots of upside after a pull back to around $10.

You could buy it. Cruises are overbooking. Trend towards travel will continue, it won't be one summer and finished. Cruise companies should benefit. There's lots of disposable money out there. Be careful of a recession, as this falls into discretionary income and would be one of the first things to go.

We would consider CCL a very high risk stock. Just as it is recovering from Covid, a recession is now a possibility. Cash flow has been negative for three years, and high yield debt was issued for the company to survive the pandemic. Debt is now $31B (net). Even in a 'good' year cash flow was only $5.5B. It is expected to make money next year but we do not see it as a stock to enter into at this time. 
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