Royal Caribbean (RCL) is Thursday’s IBD 50 Growth Stocks To Watch pick as it forms a cup base and nears a buy point. The cruise line company raised guidance in mid-February due to strong demand, reversing Royal Caribbean stock’s downtrend.
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The stock is ranked second out of 48 stocks in the leisure services group. The group rose to 73rd from 126th four weeks ago. Demand for cruises and international travel has been robust and is expected to remain strong.
Royal Caribbean Stock Nears A Buy Point
Royal Caribbean stock is in a third-stage base with a 133.77 buy point, according MarketSurge pattern recognition. The buy point coincides with its 52-week high reached on Feb. 1, the day after the cruise line company reported a mixed fourth quarter. The report started a sell-off that took the stock below its 50-day moving average several days later.
But the cruise line operator gapped up 6.7% in heavy volume on Feb. 22, after the company gave higher full-year 2024 adjusted earnings guidance the previous evening. Royal Caribbean stock reclaimed its 50-day line and has continued to climb back.
CEO Expects Great Things
Royal Caribbean beat its fourth-quarter earnings estimates but came up short against sales views. Still, the outlook is positive.
“With the wind in our sails and record-breaking bookings, 2024 is poised to be another robust year,” CEO Jason Liberty said in the earnings report.
The company raised its full-year earnings per share to $9.90-$10.10 from its February target of $9.50-$9.70.
“Since our last earnings call, robust demand for our vacation experiences has significantly exceeded our initial expectations,” Liberty said.
Royal Caribbean’s first five weeks of the year — called the WAVE weeks — were the best in the company’s history.
Current-quarter sales are expected to grow 27% then trail off to a 13% increase the following two quarters, according to FactSet estimates in MarketSurge. Analysts also forecast 47% profit growth in 2024 and 16% in 2025.
Royal Caribbean stock holds a 98 IBD Composite Rating. Its 82 EPS Rating includes losses racked up going back to 2020 during the pandemic.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
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