The pandemic tanked hundreds of otherwise great stocks, and when the pandemic’s end came in view, well… it was “game on.” Ever since, investors have been trying to time “the recovery.”
And like I’ve been saying for months now, investors haven’t had the smoothest ride. That’s why I’ve recommended my paid subscribers trade these stocks rather than buy outright. Not that there aren’t great stocks to buy.
One stock I know of is up for the last 12 months, but it’s had seven declines of more than $10 over that same time frame. That’s great if you’re trading it, but as a buy-and-hold, it’s been a white-knuckle ride with a ton of panic and volatility to deal with.
With all that said, the pandemic is ending, and I see the big up-and-down recovery-stock swings we’ve seen ending, too. An “all upside” picture is emerging.
That means there’s not much time left to scoop these up…
The Recovery Hasn’t Exactly Been Even
It hasn’t been all volatility for the recovery plays. The U.S. Global Jets ETF (NYSEArca: JETS) is up more than 73% for the year, and there’s been some volatility that’s knocked the foam off the glass, but it’s had a smoother ride up.
Same goes for the Invesco Dynamic Leisure & Entertainment ETF (NYSEArca: PEJ). It’s up more than 51% over the past year; it’s had two big spikes and sell-offs.
But then there are the cruise stocks. The sector has been a dicey bet.
They were hit much harder in early 2020 as horror stories about COVID-19 running wild on cruise ships like the Diamond Princess hit the headlines. Even before the lockdowns, these stocks were getting killed. Every major cruise line suspended operations in early 2020, and the industry suffered – conservatively – about $50 billion in losses.
Investors were clearly hoping cruise lines were turning into “all upside” plays, but the sector has been slow to recover, moving in fits and starts.
Royal Caribbean Cruises Ltd. (NYSE: RCL) was the “poster boy” for the recovery plays. This time last year, it was trading at just under 50 bucks. But by June 8, it had shot up past $75… then three weeks later, it was back down to $46. That wasn’t one-off volatility; that happened again and again… and again.
But I’m seeing real signs that the cruise lines are turning into the last great recovery play out there.
Now that coronavirus vaccines are going into arms, instead of just being news stories, cruise bookings have finally started to pick up – that’s been the “secret sauce,” (or maybe not-so-secret) missing from this recovery segment since summer and autumn of 2020. Dates for some of the first big sailings since February and March 2020 are being set right now.
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) announced that it plans to resume sailing from U.S. ports again by August 2021. Rivals Carnival Corp. (NYSE: CCL) and Royal Caribbean are returning to U.S. shores this summer, as well.
Of course, there’s a lot riding on those bookings. There’s always the chance the numbers could be underwhelming. But as we’ve seen throughout the recovery, pent-up demand is a powerful thing. My hunch is that, with 150 million Americans at least partially vaccinated, bookings for this cruise season will impress.
So, I think it’s finally time to put the cruise lines on your radar. NCLH shares, for instance, are still down 48% or so from their December 2019 highs. Even if demand takes a minute to pick up, there’s still lots of upside there, without the big downside plunges investors experienced over the past year.
Bottom line: Buy Norwegian on any pullback – Carnival and Royal Caribbean look like buys here, too. I think these are some of the last recovery discounts left.
— Andrew Keene
Source: Money Morning