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Some investors buoyant as cruise stocks sink

With the value of cruise company shares on the decline due to the spread of coronavirus, analysts are touting that this will present an opportunity for patient investors to wait for the upswing once the epidemic is resolved.

Value in cruise ship shares continue to sink with nervous investors.

Timothy Smith, in a piece published on Investopedia this week, quoted James Hardiman, an analyst from Wedbush, who said Carnival Cruise Line’s stock might be one to watch.

He explained that the cruise firm’s lower exposure to China places it in a better position than its competitors.

Carnival Cruise stock issued a 4.57 per cent dividend as at February 10.

Further, as of February 10, 2020, Carnival stock issued a healthy 4.57 per cent dividend yield and traded underwater by 17 per cent on the year, Hardman outlined in the Investopedia report. 

Carnival operates a global cruise company with more than 100 ships sailing under brand names such as Carnival Cruise Line, Princess Cruises, Holland America Line, and P&O Cruises.

A cruise ship berths near this white sand beach destination in Grand Turk, Turks and Caicos Islands. (Photo: Andy Newman/Carnival Cruise Lines)

Smith says although the company estimates that coronavirus will affect its 2020 earnings per share (EPS) by between three and six cents, “traders and investors should look for buying opportunities at the US$40 level, where price finds support from the prominent October swing low.

Ayi Zalmon, writing for Barrons in another online report, noted that coronavirus has now sickened 135 people on board a 3,500-person ship called the Diamond Princess, currently docked in Japan.

The Diamond Princess cruise ship, operated by Carnival Corp, sits docked as members of media stand in Yokohama, Japan, on Friday, February 7, 2020. Japan confirmed 41 more cases of the new coronavirus aboard a quarantined cruise ship and denied entry to another vessel as it sought to control the spread of the deadly infection, with thousands now stranded on stricken luxury liners.

Zalmon noted that, overall, cruise line stocks fell when the market first reacted to the spread of the virus in mid-January, but they have relatively held steady up to last week.

However, as more ships reported a problem with the virus, both Carnival and Royal Caribbean stocks slipped. The problem has emerged during the busy season for cruise lines — January to March.

Booking agents report that volumes have fallen since the start of February, as coronavirus headlines continue to dominate the news.