TRAVEL

Cruise Stocks Have Rallied From Their Pandemic Lows — And One Company Is Going Public To Get A Piece of the Action

After a chaotic pandemic for cruise companies, the choppy waters appear to be subsiding — and Americans are setting sail again. Last year, 31.7M passengers boarded cruises from ports, surpassing pre-Covid levels. And with demand floating up, one cruise company is testing the waters on Wall Street.

Voyaging to markets: Conde Nast readers named Viking ($VIK) the top cruise company for oceans, rivers, and expeditions. While most people are familiar with ocean cruises, specialty river and expedition cruises have become a hit, and tourists are looking for more scenic ports of call. Viking saw 51% of its 650K guests last year returning for more. The company hopes to use that brand loyalty as it approaches its biggest dock yet — the New York Stock Exchange, where it has filed to go public and could fetch a $10B valuation.

• Viking dominated the luxury ocean cruise market with a 26% share — capturing over 51% of the specialty North American river cruise market.

• In 2023, Viking’s revenue jumped nearly 50% to over $4.7B — with adjusted free cash flow and EBITDA exceeding $1B.

Cruising comeback?

Viking isn’t the only company riding the wave of post-Covid cruising demand. Carnival ($CCL), Royal Caribbean ($RCL), and Norwegian Cruise Line ($NCLH) have been riding high as bookings bounce back. With cruises making up just 1.5-2% of the total travel market, companies are banking on growth through larger ships and more orders.

• In January, Royal Caribbean’s $2B Icon of the Seas set sail, claiming the title of the world’s largest cruise ship with a maximum capacity of 7.6K passengers.

• On Tuesday, Norwegian placed a record order for eight new cruise ships — aiming to meet rising demand and expand passenger loads by 4-6% annually through 2036.

Forward-looking: Cruise Industry News predicts that 14 new cruise ships will hit the seas in 2024 — just in time for a 12.6% passenger increase this year forecasted by the Cruise Line International Association. Fresh competition in the cruise market, like Virgin Cruises, is shaking things up with all-inclusive fares and subscription models targeting chronic cruisers.

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LARGECAP RECAP

📈 Alphabet’s AI comeback spells upside for the stock

Acknowledging the problem is the first step towards a solution — and for Alphabet ($GOOG), controversies like producing a Black George Washington and comparisons to Hitler were likely the problems that sent CEO Sundar Pichai on a mission to fix Gemini, its OpenAI competitor. Weeks after a rocky rollout, investors are catching a glimpse of its fixes — driving $GOOG shares up by 20% since.

• This week, Google unveiled updates to its AI suite at its annual cloud computing conference — including a promising turnaround in Gemini’s generative AI capabilities.

• One of the biggest strides is grounding, allowing Gemini users to connect the AI’s responses to Google search sources, ensuring “greater accuracy and freshness,” says Google Cloud CEO Thomas Kurian.

Comeback quarter: With the tech giant sitting shy of a $2T valuation, analysts are mixed on what comes next. Bank of America’s Justin Post sees promise, adding that the credible demos should be a “positive driver for the stock.” But not everybody is sure the stock can catch up with AI peers — including Baron Opportunity Fund’s Michael Lippert, who warns that AI could disrupt Google’s core revenue source… its search business.

Read: Explore Alphabet's AI evolution and the uproar over the Gemini model

Best buy is betting big on this startup… and so can you. The leading retail distributor of Smart Home products has recently added RYSE’s Smart Shades to its roster by stocking them in 100+ stores. Best Buy made similar bets on smart home titans Ring and Nest, both of which saw billion-dollar exits at the hands of Amazon and Google. Invest in RYSE here →*

Markets & Economy

OPEC predicts steady demand but lower non-OPEC supply: They foresee a 2.2M barrels/day demand growth this year, as previously predicted. However, non-OPEC supply growth is now expected to decrease to 1M barrels/day instead of a previously forecasted 1.1M barrels/day. [Read]

US dollar hits 34-year high against yen: The March CPI report triggered a 0.4% surge — and now US investors are waiting to see if Japan does anything to lift the yen. Despite recent rate hikes, Japan’s currency remains unchanged. [Read]

Many public colleges outperform elite private colleges on ROI: As tuition balloons and the job market gets tougher, students are reconsidering prestigious schools. For example, the average ROI from the University of Georgia is 31% higher than that of selective private colleges like Wake Forest. [Read]

Business & Wealth

Lawmakers target private equity (PE) in healthcare: New laws may require PE firms to be licensed for healthcare involvement, making it easier for government agencies to block deals — which data suggests results in lower staffing levels and poorer patient outcomes. [Read]

Record-high 323 medicines face shortages: Crackdowns on pain meds and the rise of hard-to-get obesity drugs drive the uptick in shortages. Last week, the Biden admin announced plans to address the issue by rewarding hospitals that maintain essential medicine reserves. [Read]

California restaurant chains raise prices amid $20 minimum wage: Sorry, Californians. That Chipotle ($CMG) chicken burrito now costs 8.3% more than in February. And if you’re washing that down with a venti iced caramel macchiato from Starbucks ($SBUX), expect it to be 8.4% pricier than two months ago. [Read]

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DIGIT OF THE DAY

12% of Americans Taking a Risk and Living Without Home Insurance In 2023

Home insurance traditionally provides peace of mind against everything from flooding, fires, hurricanes, and earthquakes — but rising premiums have prompted many homeowners to opt out of coverage. According to the Insurance Information Institute, a record 12% of Americans reported lacking home insurance last year, as more homeowners fully paid off their homes. However, homeowners are taking a gamble — even if they believe they’re saving money.

• Between 2021 and 2023, annual home insurance costs jumped ~20% — with rates in 19 states climbing 10%+ last year due to an influx of claims linked to floods, wildfires, and other natural disasters.

• Today, the average insurance premium stands at $1,759 per year for $250K worth of coverage — up 23% from the previous year. Insurers have become more hesitant to cover homes in high-risk areas, contributing to these escalating costs.

Risks galore: While many Americans justify forgoing insurance due to a lack of recent disasters, most mortgage lenders require a policy until the loan is fully paid off. Rising premiums aren’t exactly greedflation, as evidenced by insurers facing over $55B in losses on property-casualty policies since 2021. These losses are a warning for those considering going without coverage — especially in disaster-prone regions. Even though premiums may seem heavy, it’s crucial for Americans to weigh the potential consequences — including the risk of losing their most valuable asset, their home.

Read: Delve deeper into the risks and costs of homeownership and hear why more Americans are opting out of home insurance coverage