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Investors at Carnival Corporation (NYSE:CCL) had an excellent November. Last month, CCL shares rose by more than 70%, currently just over $23 trading. So far, shares are still down about 54%. Source: Flickr On October 8, Carnival released a trading update. It was said: “From September 20, 2020, wholesale bookings for the second half of 2021, currently on sale, will be at the top of the historic area. The company believes this shows the potential long-term demand for cruises. Given the encouraging news and the recent price increase, market participants are wondering whether the time has come to invest in CCL equities. If you are not yet a shareholder, you can wait for the next quarterly report to be released in mid-December. Any drop below $20, particularly around $18, could provide an acceptable risk-return profile for long-term investors. InvestorPlace – Stock Market News, Stock Advice – Trading Tips Why Cruise Stocks Have Been Rallying CCL shares are not the only cruise lines whose shares have recently brought holiday cheers to investor portfolios. Share prices of three other cruise lines have also recently been revived.
Last month, their prices behaved like this: Lindblad Expeditions (NASDAQ:LIND) — 79%; Norwegian Cruise Line (NYSE:NCLH) – climbed 57%; Royal Caribbean (NYSE:RCL) — climbed 42%. Several factors contributed to the rally. On October 30, the U.S. Centers for Disease Control and Prevention (CDC) released a confidence-building framework, which outlines a plan for “safe and responsible recovery of passenger cruises.” 7 Growth Stocks Flying Under the Radar This new order replaced the old “No Sail Order,” which had in fact meant a total halt to cruise departures to the United States. In addition the reduced possibility for international air travel around the world cruises has made it almost impossible. Now, the CDC is ready to work with cruise lines “so that they can resume passenger operations, with a focus on preventing the spread of the new coronavirus on cruise ships.” In November, Pfizer (NYSE: PFE), BioNTech (NASDAQ:BNTX), Moderna (NASDAQ:MRNA) and AstraZeneca (NASDAQ:AZN) announced several Covid 19 vaccines. In fact. On 2 December, the UNITED Kingdom was the first country to approve the Pfizer/BioNTech Covid 19 vaccine. Finally, the wider market seems to have raised question marks behind the presidential elections. Driven by these developments, cruise shares have recovered. In fact, most other travel events also held notable rallies in November. Should you now buy CCL stock? Cancellations and non-sailing orders since March have been extremely the financial health of the carnival.
Cruise ships have long been vulnerable to virus outbreaks because passengers are nearby. As a result, it may be too early to be too optimistic about full cruises from U.S. ports. However, the vaccine news has given hope to industry stakeholders and investors. In other words, there is light at the end of the tunnel. But the recent rise in the price means that the short-term technical charts of the CCL stock look overbought. While an action may remain over-purchased for some time, it would be wise to exercise caution. A fall below $20, around $18, seems likely. Such a short-term decline would allow potential investors to have a better margin of safety. If you are a Carnival shareholder, you might consider taking some of your paper earnings.
You can also secure your long CCL position with a secure call that expires on January 15. It would offer some downside protection, while you can participate in a potential rebound in carnival shares. Investors who are not willing to transfer capital in the entire CCL stock may instead consider buying an exchange-traded fund (ETF) that holds Carnival as a holding company.
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