All things STOCKS

#8,176
#8,176
Thunder Good-Oil said:
Carnival, Spirit, JETS, XOM, CVX, and Disney are taking off today. All are on my main Watchlust and are up 4% or better. CCL is up around 10%.
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I see the short term bull case for both travel and leisure as well as energy, but it wasn't until I read your post that I considered what an odd pairing these two sectors are from a valuation standpoint. Energy stocks gain on increased oil prices, but those rising prices should challenge the valuation of travel plays that are now much more leveraged than they were pre covid but are now facing higher fuel costs than they did pre pandemic.
 
#8,178
#8,178
TheColdVolTruth said:
I see the short term bull case for both travel and leisure as well as energy, but it wasn't until I read your post that I considered what an odd pairing these two sectors are from a valuation standpoint. Energy stocks gain on increased oil prices, but those rising prices should challenge the valuation of travel plays that are now much more leveraged than they were pre covid but are now facing higher fuel costs than they did pre pandemic.
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Airliners and cruise ships will be powered by onboard windmills.
 
#8,180
#8,180
TheColdVolTruth said:
If you say so. It's just odd to see both sectors running so hot at the same time.
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I think that it is because Big Oil equities are still beaten up, there’s a ton of pent up demand about to be unleashed, and big dividends have a better chance of not being cut if revenues grow.

Same with travel... pent up demand. The virus vaccines have not had serious setbacks and growing numbers of people are getting in line. Also, even if fuel cost does spike, the absence of any revenue has been a huge problem when the debt must be serviced on their huge investments in fixed assets. Even if the planes and ships are leased from finance companies they are still on balance sheets as capital leases/liabilities and defaulting on the payments would be devastating. First step is surviving. Becoming profitable is secondary right now.
 
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#8,186
#8,186
Fuel is also pretty much a direct, purely positive correlation to trips. Labor and food as well. But those payments on docked assets are fixed and don’t pause with idle revenue generating investments anchored.
 
#8,189
#8,189
Thunder Good-Oil said:
I think that it is because Big Oil equities are still beaten up, there’s a ton of pent up demand about to be unleashed, and big dividends have a better chance of not being cut if revenues grow.

Same with travel... pent up demand. The virus vaccines have not had serious setbacks and growing numbers of people are getting in line. Also, even if fuel cost does spike, the absence of any revenue has been a huge problem when the debt must be serviced on their huge investments in fixed assets. Even if the planes and ships are leased from finance companies they are still on balance sheets as capital leases/liabilities and defaulting on the payments would be devastating. First step is surviving. Becoming profitable is secondary right now.
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Cruise lines have a fuel cost clause in their passenger contracts, and the airlines raise airfares at will. Cruise prices have gone way up already.
 
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#8,191
#8,191
Thunder Good-Oil said:
Barriers to entry might be their biggest advantage as an industry.
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It's one of the only advantages to that industry that I can think of. It doesn't come close to outweighing the disadvantages.

High fixed costs, very sensitive to changes in input costs, very cyclical, susceptible to bad PR (i.e., drunk guy falling overboard, food poisoning onboard, a ship has an accident, etc.). Relative to other businesses, it just seems like there are a ton of things that can go wrong and a limited number of things that can go right.
 
#8,195
#8,195
Velo Vol said:
Interesting. I would have guessed labor would be a higher percentage.
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They don't pay the unskilled workers much. Most of their pay comes from tips. It's still usually more than they can make in their home country.
05_never_again said:
It's one of the only advantages to that industry that I can think of. It doesn't come close to outweighing the disadvantages.

High fixed costs, very sensitive to changes in input costs, very cyclical, susceptible to bad PR (i.e., drunk guy falling overboard, food poisoning onboard, a ship has an accident, etc.). Relative to other businesses, it just seems like there are a ton of things that can go wrong and a limited number of things that can go right.
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The cruise industry has been mostly non-cyclical. Their ships sail at near capacity year round. I've been thinking that would end for years, but it has not.
It must be profitable. More ships keep entering the biz. CCL brought in new ships recently and sold the old ones to other cruise lines who will use them.
 
#8,196
#8,196
Go aeiou said:
They don't pay the unskilled workers much. Most of their pay comes from tips. It's still usually more than they can make in their home country.


The cruise industry has been mostly non-cyclical. Their ships sail at near capacity year round. I've been thinking that would end for years, but it has not.
It must be profitable. More ships keep entering the biz. CCL brought in new ships recently and sold the old ones to other cruise lines who will use them.
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I meant the economic cycle. Cruises are a total discretionary purchase that is among the first to go when budgets tighten.
 
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