The three major cruise companies have been the standout performers in terms of share price performance in the first half of 2023, figures show.
Shares in Carnival have gained 134% this year, Royal Caribbean has more than doubled this year and is on track for its best annual performance since 1997, while Norwegian has jumped 78%, set to be a record year.
Carnival’s gain this year makes it the third-best performer in the S&P 500 Index, trailing only Nvidia Corp and Facebook owner Meta Platforms, according to Bloomberg.
And the rally in cruise ship stocks looks to be far from over according to a recent report by one Wall Street analyst David Katz at Jefferies.
The brokerage upgraded its rating on Carnival, whose shares are up 68% in June alone, to buy from hold and boosted its price target to a street-high $25.
“Despite the strong year-to-date performance, we believe the journey from a good trade to long-term investment case remains ahead,” he said in a note to clients last week.
Katz points to Carnival’s solid demand growth and its pivot toward positive cash flows as a reason why the stock should continue to perform well.
The analyst said new chief executive Josh Weinstein, who took over in August 2022, was “also a major driver of Carnival’s resurgence and its long-term attractiveness”.
“It has become clearer to us that his operating engagement has and should continue to prove beneficial to the company and its results,” Katz said.
VLGC owners were the next best performing sector in the first half of the year, with Advance Gas, BW LPG and Dorian LPG up 77%, 68% and 48% respectively, according to figures from Pareto Securities.
Clarksons recently stated that it was “cautiously optimistic” about the outlook for the VLGC market on the back of strong LPG volumes coming out of the US.
In a report in late June, it said many people had feared that some market pressure would emerge this year following record newbuilding contracting in 2021.
However, Norwegian research company ViaMar is predicting a drop in hugely lucrative VLGC rates later this year as vessel supply ramps up.
In contrast to Clarksons, the VesselsValue-owned company believes the supply side growth in the VLGC market is likely to outgrow the demand side in 2023.
Other standout share price performers included Oslo-listed Okeanis Eco Tankers, whose shares were up 56% in the first half of 2023, according to Pareto Securities.
MPC Container Ships’ shares are up 41% so far this year, while recently US-listed LNG player Cool Company has seen its shares increase 37%.
In the tanker space, Frontline was up 33% since the start of the year, while Nordic American Tankers and Teekay Tankers have seen their share prices appreciate by 30% and 28% respectively.
Dry bulk looked to be the worst performing sector in terms of share price performance, according to the figures from Pareto Securities.
Most stocks were in the red for the first half of the year with only the likes of Belships and 2020 Bulkers showing increases of 28% and 14% respectively.
