PowerRatings Stock Spotlight: Carnival Corp

People love to vacation! This is an indisputable fact. Whether it's just a weekend getaway or a round the world extravaganza everyone looks forward to their vacation time to travel. Even during recessionary periods the urge to vacation and travel remains strong despite the tight economy. Some could argue that the pressures brought on by a weak economic situation makes travel and vacation all the more critical.

However, most look to stretch their dollar as far as possible while maintaining a high fun quotient. Thinking along these lines as a possible investment angle, I began to consider the cruise industry as a possible target. I can see the huge passenger ships coming into their midtown Manhattan port almost on a daily basis from my home office. Some of these boats are simply monstrous with all types of amenities visible on deck. Provided the frequency of sailing out of the NYC port combined with knowing that cruising provides a great bang for ones recessionary dollar, I decided to look deeper into the business as a possible investment.

I focused on the Carnival Corporation (CCL | Quote | Chart | News | PowerRating) as a major company in the space. As usual, my step was to take a look at the Long Term PowerRatings of Carnival. They have earned a 5 Long Term PowerRating. This is right in the middle of the 1 to 10 scale.

For those of you unfamiliar with our PowerRating system, it is a statistically based stock picking tool based on 14 years of extensive studies across most market conditions. Long term investors should seek to build portfolios made up of top rated stocks and avoid those with the low ranks of 1or 2. These low rated stocks have proven to simply be too volatile, therefore risky to be part of your prudent, conservative long term holdings.  However, it is important to note, that PowerRatings are a dynamic metric. This refers to the fact that they can change on a daily basis and always reflect the stocks potential one year into the future.

Let's drill down into Carnival Corp. The company was first conceived in 1972 when Ted Arison bought a single ship named the Mardi Gras. Even then, this relatively tiny ship had festive on board ambiance that set it apart from the competition. The first cruise was a one trip from Miami to San Juan with just enough fuel to make it. By 1974, Carnival was a small, struggling cruise line that Arison bought back for just $1 dollar plus the assumption of $5 million dollars of debt.

By 1987, Carnival had achieved the status of the world's most popular cruise line. They went public this year offering 20% of its common stock. This enabled the company to go on an acquisition spree. They have expanded to the point of being the world's first truly global cruise operator owning 12 well known brands and being the worlds largest cruise operator.

Recently, Carnival has been widely featured in the financial news for beating analysts profit estimates for fiscal third quarter 2009. The profits actually fell 20% but were higher than expected. The recovering economy is allowing the firm to begin to increase their deeply discounted fares and management believes they have stabilized. They reported an uptick in bookings however Credit Suisse just downgraded the company to neutral today.

Despite the downgrade, Carnival is actually trading higher on the day. Technically, price has been uptrending since June 16th and is above both the 50 and 200-day Simple Moving Averages. The positive news of profits beating estimates triggered a gap up to the $34/35.00 dollar a share range. Support appears at $32.00/share.

Learn what you need to know as an active investor looking to invest in companies with a history of financial strength and a track record for growth. Click the link above or call us at 888-484-8220 extension 1 to get your copy of the "5 Secrets to Successful Stock Investing" today!

David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.