Yahoo Finance Carnival Corporation & plc (CCL): Is this Robinhood Stock a Good Buy?
We recently compiled a list of the 10 Best Robinhood Stocks Under $20. In this article, we are going to take a look at where Carnival Corporation & plc (NYSE:CCL) stands against the other Robinhood stocks.
The market reacted favorably after the Federal Reserve’s June 11-12 meeting. The broader market marked record closes. At the June 12 press conference, Fed Chairman Jerome Powell emphasized the Fed's focus on its dual mandate of achieving maximum employment and stable prices. While the labor market remains strong with continued job gains and low unemployment, inflation has decreased significantly from its peak but remains above the 2% target, currently at 2.7% and the Federal Open Market Committee (FOMC) believes it's still high.
Key Developments
The Fed Chairman reported that GDP growth slowed from 3.4% in Q4 of 2023 to 1.3% in Q1 of 2024. However, underlying demand indicated by private domestic final purchases grew at 2.8%. Consumer spending has moderated but remains solid, and investment in equipment and intangibles has improved. Moreover, the labor market is balanced, with job gains averaging 218,000 per month in April and May, and the unemployment rate was at 4%. Inflation, as measured by PCE prices, rose 2.7% over the past year, while core PCE rose 2.8% and the CPI rose 3.3% in May, with the core CPI at 3.4%. Finally, the FOMC decided to keep the federal funds rate unchanged at 5.25% to 5.5% and to continue reducing securities holdings to manage inflation.
Powell emphasized a cautious approach to policy adjustments. The Chairman said that while some progress has been made toward the inflation target, more data is needed to ensure inflation is sustainably moving toward 2%. The Fed will continue to assess economic data and adjust policies as needed to support their dual mandate. He reiterated the commitment to restoring price stability to ensure long-term economic health. The Fed chair noted that the median projection for the federal funds rate by FOMC participants is 5.1% by the end of 2024 if the “economy evolves as expected.” Nevertheless, Jerome Powell highlighted that the projections are not a guarantee and will depend upon the data in the coming months.
The CME’s FedWatch tool reveals that 35.8% of the market expects the interest rates to remain the same in September, 59.2% expect a 25 basis points (bps) reduction, and 5% believe in a 50 bps rate cut. These numbers have risen significantly in favor of rate cuts since we reported them on May 31 in our article about the best up-and-coming stocks.
After a long wait, the Fed has finally hinted at potential rate cuts in September, which brings tons of opportunities in the market. Let's take a look at some now.
Our Methodology
For this article, we used the app to identify over 100 stocks with a $2 billion market cap that were trading under $20, as of June 12. We narrowed down our list to the stocks with positive hedge fund sentiment, analyst ratings, and optimistic prospects and chose the 10 stocks with the highest number of institutional investors.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A luxurious cruise ship sailing the deep blue sea, sun glistening off its decks.
Carnival Corporation & plc (NYSE:CCL)
Number of Hedge Fund Holders: 56
Share Price as of June 12: $16.74
Carnival Corporation & plc (NYSE:CCL) provides leisure travel services and operates through NAA Cruise Operations, Europe Cruise Operations, Cruise Support, and Tour and Other segments. The company is one of the best Robinhood stocks under $20 and its portfolio of brands includes Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises, and Cunard.
On June 14, Cruise operators faced challenges as BofA forecasted lower pricing for June. BofA Securities indicated that prices in early June have fallen compared to the previous month. Consequently, share prices of all major cruise lines closed the day in red. However, the recent earnings of these cruise lines, including Carnival Corporation & plc (NYSE:CCL), show strength in the stocks. The company’s total customer deposits and occupancy are consistently increasing. In the first quarter of 2024, the company recorded first-quarter deposits at $7 billion, almost doubling the deposits in the first quarter of 2022. Moreover, in Q1 of 2022, the cruise line’s occupancy was at 54% and reached 102% in Q1 of 2024.
Carnival Corporation & plc’s (NYSE:CCL) sustainable revenue growth is supported by investments in new ships like Carnival Jubilee, Sun Princess, and Queen Anne, as well as the modernization of existing fleets, such as the AIDA evolution program. On June 12, the company’s Cunard line announced record-breaking bookings after the launch of its new 3,000 guest ship, Queen Anne. Moreover, exclusive destinations, such as Celebration Key, make a compelling case for the company to generate significant revenue growth and improve guest experiences, which could drive the demand for the company’s offerings further.
Based on 16 Wall Street analysts’ ratings in the last three months, Carnival Corporation & plc (NYSE:CCL) has a consensus rating of strong buy. The average price target of $22.00 implies an upside of 31.42% from the current levels, as of June 12. Furthermore, while the company is trading at a PE ratio of 52x. analysts estimate that the company will go from posting negative $0.06 EPS in 2023 to a nearly 1800% increase to $1.01 and a further 41% increase in 2025.
In Q1, 56 hedge funds held positions in Carnival Corporation & plc (NYSE:CCL) worth $1.5 billion. Point72 Asset Management has increased its stake in the company by 228% to 12.76 million shares worth $208.494 million and is the most significant shareholder as of the first quarter.
Overall CCL ranks 3rd on our list of the best Robinhood stocks to buy. You can visit 10 Best Robinhood Stocks Under $20 to see the other Robinhood stocks that are on hedge funds’ radar. While we acknowledge the potential of CCL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CCL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
