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Like their rivals in the cruise business, executives at Carnival (CCL, news, msgs) had their hands full this winter devising discounts that could compel cost-conscious consumers to book a vacation.
Then came the pirates and swine flu.
Despite the obstacles, investors have demonstrated confidence in Carnival; shares in the company are up 9% so far this year and bounced back nearly 4% Wednesday after getting hammered earlier in the week on swine flu fears.
Carnival appears on a daily list created using StockScouter, an MSN Money tool that identifies 10 stocks with strong growth prospects in the near term. All stocks with Scouter ratings of 8, 9 or 10 are considered for the list, which is then shortened to exclude stocks with a trading volume below 50,000 shares a day. The remaining stocks are ranked on the basis of market capitalization, sector membership and whether they are growth or value stocks.
Carnival, headquartered in Miami and London, operates a fleet of 89 ships sailing in North America, Europe and Australia under a dozen brands, including its flagship Carnival Cruise Lines, Holland America and Princess Cruise Lines.
Carnival last month said first-quarter profit climbed 10% due to cost cuts and fares that are down about 15% from a year earlier; the deals were too good to pass up for some customers. But the company lowered its guidance for the second quarter and full year, citing the weak economy and higher fuel prices.
Pirates periodically pose a problem to Carnival -- one of its vessels sailing under its luxury Seabourn brand was attacked by armed pirates off the coast of Somalia in 2005. The captain evaded the pirates, Carnival said.
Somali pirates vowed to hunt down American ships and kill their crews following the April 12 rescue of Maersk Alabama freighter Capt. Richard Phillips, who had exchanged himself to safeguard his crew during a thwarted hijacking.
Stock Chart (Year)
Carnival
Carnival this week responded to the swine flu scare by canceling all calls at Mexican ports through Monday.
Investors' positive reaction to cruise operators shouldn't come as a surprise, as the companies "have historically been proactive in taking precautionary measures to ensure the safety of their passengers is never in doubt," Stifel Nicolaus analyst Steven Wieczynski wrote in a note to clients.
"The (flu) news, while not positive, helps support one of our reasons for recommending cruise shares in that operators have the ability to move their assets at any given moment to meet demand," Wieczynski said.
| Company | Sector | Wednesday's close | 2009 change | Scouter score |
|---|---|---|---|---|
Oil and gas drilling | $15.76 | 32% | 10 | |
Semiconductors | $10.32 | 55% | 9 | |
Steel | $25.50 | -31% | 8 | |
Semiconductors | $5.30 | 56% | 8 | |
Software | $26.75 | 26% | 10 | |
Cruises | $26.53 | 9% | 10 | |
Networking equipment | $19.25 | 18% | 10 | |
Online marketplaces | $16.47 | 18% | 10 | |
Conglomerate | $12.22 | -24% | 10 | |
Fiber optics | $14.85 | 56% | 10 |
StockScouter beats the market
At MSN Money, we think our StockScouter rating system is about as good as it gets when you're trying to decide where to invest. Scouter rates stocks on a scale of 1 to 10. Since it was launched on Aug. 1, 2001, a portfolio of Scouter's top 50 picks has generated a total return that has clobbered the return of the Standard & Poor's 500 Index ($INX) over the same period.StockScouter looks for stocks whose business fundamentals, price behavior, valuation and stock-ownership characteristics appear to predict a rising price in the future, based on how those factors have influenced stock prices in the past. The system assigns each stock an expected six-month return and balances that return against the stock's expected volatility.
Consider this list a starting point for your stock research. Find more information about the stocks using tools such as our Research Wizard. You can also set up a watch list of stocks to see how they do over time. To read more about the StockScouter system, click here. For more detail on this list, click here. To see a full list of Scouter's top-rated stocks, click here.
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