Stocks moved higher in May, but the same can't be said for most of the publicly traded cruise line stocks. Shares of Carnival (NYSE:CCL) (NYSE:CUK) and Norwegian Cruise Line Holdings (NYSE:NCLH) declined 1% and 4.5%, respectively, last month. Only Royal Caribbean (NYSE:RCL) inched higher, with its 10.9% gain more than doubling the general market's 4.5% ascent. 

If it seems as if all of the cruise line stocks moved higher in May, it's probably because they bounced back nicely off their mid-March lows in April. The investing climate has cooled for the industry this past month, with many cruise ships struggling to repatriate crews off their vessels and cruise lines pushing out the resumption of sailings to August.

You've fared well as an investor if you were lucky to nail the bottom. All three stocks have more than doubled off their coronavirus-fueled sell-offs. However, with all but one cruise line stock taking small steps back in May, the real question now is if they can all start moving in the right direction again in June. 

A pair of deck chairs overlooking the ocean a cruise ship railing.

Image source: Getty Images.

Bon voyage

All three cruise lines have fortified their balance sheets since the industry shutdown spooked investors. Carnival, Royal Caribbean, and Norwegian Cruise Line have raised billions in liquidity, giving them enough wiggle room to get through this year under current conditions. It also helps the near-term liquidity snapshot that a little more than half of the passengers on cancelled trips have opted for enhanced future credit with the cruise line instead of a cash refund. 

Things can get worse, of course. A lot of people on cruise ships got sick and died. A Miami Herald investigation has the tally at more than 3,000 confirmed COVID-19 cases among passengers and crew members across 63 cruise ships, resulting in 82 fatalities. The confined nature of cruise traveling and the daily flow of new ports of call have made large ships fertile soil for a viral outbreak. The Centers for Disease Control and Prevention's No Sail Order has already been extended into the summer, and it can be stretched out even longer if the global pandemic threat continues. 

Things will get exponentially worse if future sailings have to be cancelled. This will mean more refunds, which could eventually lead to a confidence crisis among the industry's biggest fans.

There isn't a lot beyond a vaccine or a sharp reversal in new cases that could serve as a bullish catalyst for the industry in June. With crew member lawsuits piling up and inevitably passenger complaints to follow, there are a lot of headwinds facing Carnival, Royal Caribbean, and Norwegian Cruise Line these days. The looming global recession obviously won't help.

An important bullish takeaway is that things don't have to get back to how they used to be for the stocks to bounce back. All three stocks are trading more than 60% off their earlier highs. The shares can double from here and still not be back to where we were in January. A lot of things will need to go right for Carnival, Royal Caribbean, and Norwegian Cruise Line to live up to their revised August sailing dates, but just a few steps in that direction through June could be more than enough to get the April recoveries back on track in June. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.