3 Cruise Line Stocks to Buy Hand Over Fist in December

Viking dominates its niche. Its market share of the North American outbound market is more than three times larger than its biggest competitor. A Viking river cruise isn’t cheap — costing roughly four times Carnival’s per-day average — but when you only have 95 to 190 staterooms to fill, you can afford to charge a lot for the aspirational experience.

It’s not just passengers paying a premium for the differentiated product. Viking is fetching a forward earnings multiple of 20. Carnival, Royal Caribbean, and Norwegian are trading at 13 to 18 times next year’s profit targets.

Is Viking worth the markup? I think so. Revenue climbed 11% in its latest quarter, accelerating from the 9% year over year it posted during its first quarter as a public company. Profitability is growing a lot faster, too. Its affluent and seasoned clientele is more resistant to economic setbacks than those of traditional operators.

This final entry doesn’t own any ships, but it has plenty of hands on deck. OneSpaWorld is the industry’s largest operator of cruise ship spas. The company that once traded as Steiner Leisure is back as OneSpaWorld, commanding more than 90% of the market for outsourced cruise spas. All three of the leading cruise lines lean on the specialist for manning their spas. Unlike other services that fleets offer, this is one that requires global recruiting and a network of training centers. OneSpaWorld has mastered this art for decades.

OneSpaWorld also reaches landlubbers with a presence at 52 resorts, but the heart of its business is its floating presence on 196 ships. The business is surprisingly consistent. Outside of the 2020-to-2022 pandemic-smacked years, the cruise industry has experienced more than 20 years of passenger growth. The $888 million to $893 million that OneSpaWorld is targeting for this year is a 12% increase at the midpoint. Adjusted earnings before interest, taxes, depreciation, and amortization should grow at double that clip. If you’re looking for an asset-light company that’s also a pure play on the growth of on-board cruise ship spending, this is one that that can rub you the right way.

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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 2, 2024

Rick Munarriz has positions in Carnival Corp., Norwegian Cruise Line, Royal Caribbean Cruises, and Viking. The Motley Fool recommends Carnival Corp. and Viking. The Motley Fool has a disclosure policy.

3 Cruise Line Stocks to Buy Hand Over Fist in December was originally published by The Motley Fool