Is Norwegian Cruise Line Setting Up for a Big Move? – September 14, 2021

Norwegian Cruise Line (NCLH) is the world’s third- largest cruise company by berths, operating 28 ships across three brands (Norwegian, Oceania, and Regent Seven Seas), offering both freestyle and luxury cruising. The company is growing capacity faster than its peers, expanding its brand globally.

The company has been benefiting from strong demand and growth in booking volume. Its overall cumulative bookings for 2022 are ahead of 2019 levels. However, the impact of the COVID-19 pandemic on its business results is uncertain as the Delta variant remains a concern.

NCLH’s balance sheet looks good with $2.8 billion in cash as of the most recent quarter compared with only $361 million in short-term debt. While sales are down 99.5% year over the past year, they are expected to rise 3,232% year over year in the current quarter.

The stock appears overvalued based on its forward P/E of 35.09. From June to August NCLH’s stock was trending down. Performance has been mixed since as shown in the chart below.

Take a look at the 1-year chart of NCLH below with my added notations:

NCLH has formed resistance around the $26 (red) area over the past month or two. In addition, the stock has also started an up-trending support line (green). These two lines have NCLH stuck within a common pattern known as an ascending triangle.

A long trade could be made on a break through the triangle resistance level with a protective stop place under the entry point.

NCLH shares were trading at $25.24 per share on Tuesday morning, down $0.06 (-0.24%). Year-to-date, NCLH has declined -0.75%, versus a 20.14% rise in the benchmark S&P 500 index during the same period.

Author: Christian Tharp