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Investing in cruise ship stocks

No-sail mandates sparked by COVID-19 tethered cruise ship lines around the world. But they could be poised for a comeback.

What are cruise ship stocks?

Cruise ship stocks are ownership in companies that run cruise ships and transport passengers to their destinations while offering comfort and entertainment along the way.
With a projected value of $23.8 billion in 2021, the global cruise ship industry includes more than 270 ships powered by more than 50 cruise lines.
Three companies own about 75% of the market share: Royal Caribbean, Carnival and Norwegian. The first two pay dividends to shareholders.

How to invest in the cruise ship sector

There are several ways you can get your feet wet with cruise line investing. You can buy shares of individual cruise stocks. Or you can purchase shares of an ETF that invests in multiple cruise ship stocks and possibly other stocks in the travel industry. Here’s how to start:

  1. Choose a stock trading platform. You have plenty to choose from, so be sure to compare your options to find the one that works best for you.
  2. Open your account. Be ready with your ID, Social Security number and bank account information.
  3. Fund your account. You’ll need to transfer money to your brokerage account before you can start investing. Some platforms let you start with as little as $1.
  4. Search for stocks. Look up stocks by ticker symbol or use a stock screener to filter the types you’re interested in.
  5. Place an order. Once you’ve found an investment you want, specify how much of it you wish to purchase and submit your order.
  6. Monitor your investments. Track the performance of your portfolio by logging on to your account.

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What stocks are in the cruise line sector?

See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.

What ETFs track the Cruise Ship sector?

You can also invest in ETFs that hold cruise ship stocks along with equities from companies in other industries. Here are some to consider:

  • The First Trust Consumer Discretionary AlphaDEX Fund (FXD)
  • Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RCD)
  • Invesco S&P 500 High Beta ETF (SPHB)
  • Pacer Lunt Large Cap Alternator ETF (ALTL)
  • ProShares Equities for Rising Rates ETF (EQRR)
  • VanEck Vectors Africa Index ETF (AFK)
  • SPDR S&P 500 ETF Trust (SPY)
  • iShares Core S&P 500 ETF (IVV)
  • Vanguard Mid-Cap ETF (VO)
  • Vanguard S&P 500 ETF (VOO)

Why invest in the cruise ship sector?

Cruise stocks can surge in strong economies when people have more disposable income to travel. In fact, prior to 2020, the cruise ship business was one of the fastest-growing sectors in the travel industry.
In 2018, the global cruise ship industry was valued at about $150 billion.
In 2019, it generated $5.5 billion in economic activity in the US alone, marking a 5.3% increase from 2018, according to the Cruise Lines International Association (CLIA), which represents most of the globe’s cruise ship companies.
This was fueled by a spike in people looking to take cruise vacations. In 2019, more than 1.37 million people boarded cruise ships that took off from US ports. That translated to an 8% increase from 2018 and a 26% increase from five years prior.
But downturns in the global economy and the wider travel industry can cause cruise stocks to take a major plunge.

What unique risks does the cruise ship sector face?

The cruise ship industry is connected to a wide variety of businesses that help keep it afloat. For instance, cruise ships need large amounts of fuel to operate. If volatility erupts in the energy sector and fuel prices rise, it may take a toll on cruise line company earnings.
In fact, there are many sectors with the potential to impact cruise ship stocks:

  • Industrial
  • Food and beverage
  • Apparel
  • Tech
  • Hospitality and leisure
  • Arts and entertainment
  • Finance and insurance

And of course, travel restrictions mean fewer people on cruise ships and less money in the pockets of cruise companies — as made evident by the COVID-19 pandemic.
COVID-19 took its toll on a broad range of businesses across the globe, but one of the hardest-hit sectors was the cruise line industry.
But, with the 2021 nationwide vaccine campaign well underway, the CDC has stated that Americans are safe to travel domestically if they’ve received their COVID-19 vaccination.
And things are looking up for cruise line stocks. Major players in this sector have already begun the slow process of pandemic recovery. And some stocks, like Lindblad Expeditions Holdings, have regained everything lost through 2020 and then some — now trading near an all-time high.
This sector is working hard to regain its losses and has already initiated the slow climb to recovery.

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Bottom line

Cruise ship stocks took a major hit from COVID-19, but evidence suggests the industry is working diligently to recover. The extent to which it recovers and how it will take remains uncertain.
Depending on the type of investor you are, this may look like and immense risk or an opportunity. It’s important to do your due diligence and carefully analyze cruise ship stocks and your own risk tolerance before investing.

Frequently asked questions

Why does it seem there aren’t many cruise ship stocks?
Only three companies own about 75% of the cruise ship market. While you may have heard of numerous cruise lines, there’s a good chance these are subsidiaries of Caribbean Cruise, Carnival or Norwegian.
What cruise ship mutual funds can I invest in?
You can invest in a number of mutual funds that have exposure to cruise ship stocks. But keep in mind that cruise ship stocks only make a small fraction of the holdings of most funds. Examples include the Vanguard 500 Index Fund (VFIAX) and the Fidelity 500 Index Fund (FXAIX).

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Finder is not an advisor or brokerage service. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. All editorial opinions are our own.

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Writer

Javier Simon is a freelance finance writer at Finder and a certified educator in personal finance (CEPF). He’s featured on NerdWallet, Bankrate, Yahoo Finance and Fox Business, where he’s shared his expertise on personal finance topics, such as investing, retirement planning, taxes, budgeting and savings. He has also covered breaking news, such as student loan forgiveness initiatives, the housing market and inflation’s impact on consumers’ wallets. His passion is turning complex financial concepts into actionable content that can help people improve their financial lives. Javier holds a bachelor’s degree in multimedia journalism from SUNY Plattsburgh. See full bio

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