Marc De Mesel: Oil Tankers, Cruise & Airlines Great Investment?

  • Monday, 27 April 2020 13:53
Many stocks valued cheaply. Cruise Lines, Carnival Corp (CCL & CUK, ticker for smaller part of company, half voting power but same dividend) dropped from $30B to low of $6B, now back at $10B ($12/share), valuation first seen in 1997 when revenues and book value was 10x less! Currently selling for -60% below book value (25B), absolute record. Since inception in 1987, it only traded below book value in 2008 financial crises, shortly and only -20% lower ... Other Cruise Lines like RCL & NCLH same story, trading -33% (8B vs 12B book value for Royal Caribbean) and -62% (2.5B vs 6.5B book value for Norwegian Cruise) below book value. Sure revenues cruise lines collapsed and will take likely a year before they are back. Those loans to bridge crises come expensive and will take bite out of first years earnings. Some dilution also happening, and these companies are not fast growers, for example CCL since 1986 12% per year revenue growth, since 1998 10%. However, cruising is not going out of style anytime soon and that growth rate therefore is likely to continue, and past valuations that were peaking out at triple book value, likely to come back.

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