By Peet Serfontein & Sithembile Bopela
We initiate a long position with a target price of $279 and a stop-loss of $206 (risk/reward ratio: 1:2.5).
Royal Caribbean Cruises is a leading global cruise company operating a fleet of vessels in the cruise vacation industries. The company's brands primarily serve the contemporary, premium, and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments.
Fundamentally, compared to higher market penetration rates for destinations like Las Vegas (35%) and Orlando (18%), only ~5% of the US population cruises, which indicates room for growth in the cruise industry. This, coupled with robust underlying demand for the differentiated proposition of cruises and strategic execution of the group's financial initiatives, positions the company to meet its strong medium-term growth targets.
Technically the price is developing a trough according to the Elliot wave theory (see main chart), which makes the stock an attractive investment opportunity. The presence of higher highs and higher lows suggests a strong uptrend, which supports a bullish case for the stock. Notably, Trough one represents a key support level where the price rebounded, marking the continuation of upward momentum.
A price at the lower range of an upward sloping linear regression channel pattern on the daily time interval also supports a bullish case for the stock. Downside price momentum, according to the Moving Average Convergence Divergence (MACD) histogram and a recent uptick trajectory on the On-Balance Volume (OBV) indicator, also supports this trade.
The stock remains above its 200-day simple moving average of $197.67. This suggests that the longer-term trend is still positive.
| Share Information | |
|---|---|
| Share Code | RCL |
| Industry | Consumer Services |
| Market Capital (USD) | 61.53 billion |
| One Year Total Return | 82.15% |
| Return Year-to-Date | -0.90% |
| Current Price (USD) | 228.62 |
| 52 Week High (USD) | 277.08 |
| 52 Week Low (USD) | 124.24 |
| Financial Year End | December |
| The stock price has pulled back from recent highs, but several indicators are pointing to upside potential from current levels. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY24 | FY25E | FY26E | FY27E | |
| Headline Earnings per Share (USD) | 11.80 | 14.88 | 17.64 | 20.26 |
| Growth (%) | 26.08 | 18.58 | 14.80 | |
| Dividend Per Share (USD) | 0.00 | 2.46 | 2.80 | 3.06 |
| Growth (%) | - | 13.87 | 9.29 | |
| Forward PE (times) | 15.37 | 12.96 | 11.29 | |
| Forward Dividend Yield (%) | 1.08 | 1.22 | 1.34 | |
| Earnings expectations remain robust over the near-to-medium term, with the company set to benefit from positive demand trends, and cruises increasing share of the vacation market. | ||||
Rationale:
Technical Analysis:
Long-term Fundamental view
| Share Name and Position | DOV US - Stop loss (Close the position) |
DELL US - Stop loss (Close the position) |
FE US - Stop loss (Close the position) |
|---|---|---|---|
| Entry | 194.48 | 111.44 | 40.63 |
| Current | 184.06 | 95.56 | 38.54 |
| Movement | -5.4% | -14.2% | -5.1% |
| The stock price triggered a stop-loss, prompting us to close the position. | The stock hit our stop-loss level, leading us to close the position. | The stock triggered a stop-loss, leading us to close the position |
| Share Name and Position | HCA US - Stop loss (Close the Position) |
CHTR US - Buy (Continue to hold) |
STE US (Buy) (Continue to hold) |
|---|---|---|---|
| Entry | 333.07 | 340.26 | 217.20 |
| Current | 306.30 | 368.36 | 225.81 |
| Movement | -8.0% | +8.3% | +4.0% |
| The stock triggered a stop-loss, leading us to close the position. |
A price in a developing symmetrical triangle pattern remains of interest. Remains above its 200-day simple moving average. Fading downside price momentum is supportive.
Our profit target remains at $390.00 with a trailing stop-loss at $342.00. Exit the trade by 30 May 2025. |
An Elliott wave price that is forming a trough remains of interest. Still testing its 200-day simple moving average. Upside price momentum supports the trade strategy.
Our profit target remains at $239.00 with a trailing stop-loss at $217.00. Exit the trade by 18 April 2025. |
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