Mostly Smooth Sailing with Cruising Stocks

I just got back from my first cruise. It was on Carnival lines and left from southern California and went to three ports in Mexico, Puerto Vallarta, Mazatlan, and Cabo San Lucas. Because I am susceptible to motion sickness, I had to take prescription patches called Transderm-Scop, made by Novartis AG (NVS), which trades on the New York Stock Exchange. I also had to combine that with Dramamine, formerly distributed by Pfizer (PFE), now added to the product line of Johnson + Johnson (JNJ) as part of the Pfizer Consumer Healthcare acquisition. There are just a few stock opportunities to climb on board the cruising stock industry. Hopefully there won’t be choppy seas for these stocks, but will instead be a Bon Voyage. Here they are:

Carnival Corp. (CCL)

Carnival is one of the largest cruise and vacation companies in the world. Their cruise lines which operate out of North America, the United Kingdom, Germany and Italy, include Carnival Cruise Lines, Holland America Line, Princess Cruises, Seabourn Cruise Line and Windstar Cruises in North America; AIDA in Germany; Costa Cruises in southern Europe; P&O Cruises, Cunard Line, Ocean Village and Swan Hellenic in the United Kingdom; and P&O Cruises in Australia. They operate a fleet of 81 ships, and will be receiving another 20 ships between now and 2011. They are headquartered in Miami, Florida and London, England. P/E 16.5, P/S 3.3, yield 2.4%.

Carnival plc (CUK)

This is the ADR for the Carnival stock which trades on the London Exchange. Here is how this works. Carnival Corporation & Carnival plc operates under a dual listed company structure in which Carnival Corporation and Carnival plc operate as a single economic entity through contractual agreements between each of their own separate legal entities. Shareholders of both Carnival Corporation and Carnival plc have the same voting participation and economic interest but their shares are listed on different stock exchanges and are not fungible. [Is this as clear as dirty water?] Carnival Corporation common stock is traded on the New York Stock Exchange under the symbol CCL. Carnival plc is traded on the London Stock Exchange under the symbol CCL and as an ADS on the New York Stock Exchange under the symbol CUK. Carnival is the only company in the world to be included in both the S& P 500 index in the US and the FTSE 100 index in the UK. If you look at the graphs for the Corp. and the plc stocks, they seem to move together generally, however, the ADR has outperformed the Corporation stock by several percentage points. Is there an arbitrage opportunity here? Anyway, because of the difference in price, the statistics are somewhat different: P/E 19.7, P/S 3.7, yield 2%.

Royal Caribbean Cruises Ltd. (RCL)

This company owns Royal Caribbean International [19 cruise ships with over 44,000 berths] and Celebrity Cruises [9 cruise ships with over 15,000 berths]. They also own Pullmantur S.A., which has five ships in Europe and Latin America. The company plans on having six more ships by the end of 2010. They also offers land tour vacations in Alaska, Canada and Europe. They are headquartered in Miami, Florida. P/E 14, P/S 1.7, yield 1.4%.

Royal Caribbean Cruises Ltd. Lehman ABS 8.875 Corporate Backed Trust Certificates, Series 2001-27 Trust for (CWZ)

Here's an unusual investment. I wasn't sure if I should put this in the minibond category or the unusual trust category, or both [they are technically referred to as CORTS or corporate-backed trust securities]. This is a publicly traded trust created by Lehman Brothers (LEH). The Trust's assets consist solely of senior debentures issued by Royal Caribbean Cruises Ltd. They pay dividends of $1.109 per share twice a year every April and October, similar to a bond. But it is traded on the New York Stock Exchange with a par value of $25, similar to a stock. The current yield is 8.6%.

Star Cruises Ltd. (SSKZF.PK)

This company, which is a speculative play, was founded in 1993 and operates in the Asia-Pacific region. They have 18 ships with over 23,000 berths which leave from ports in Singapore, Port Klang (Malaysia), Hong Kong and Keelung. Their brands include Star Cruises, Norwegian Cruise Line, and Orient Lines. It is also a co-owner with Genting Berhad (GEBHY) of the Sentosa casino resort in Singapore.

Author does not own any of the above.