There's no question Norwegian Cruise Line Holdings (NYSE:NCLH) still faces some rough seas in the months ahead, and maybe into 2022. It has taken on substantial amounts of debt to make it through the COVID-19 pandemic, making its return to the high seas -- and to profitability -- somewhat cloudy.
Yet there are several factors that suggest Norwegian could be one of the top stocks to benefit from the coronavirus recovery.
First to cross the finish line
With just 28 ships, Norwegian Cruise Line is the smallest of the three major U.S. cruise operators. Analysts, though, estimate about 15% of its fleet is dedicated to smaller luxury cruise ships, a competitive advantage in a post-COVID-19 environment where avoiding larger crowds may be the norm.
Moreover, the U.S. is distributing two coronavirus vaccines and with the EU just approving Moderna's vaccine, there is a good chance that a broad enough swath of the population will be vaccinated just as cruise ships are ready to leave port.
Norwegian's bookings, though obviously depressed compared to historical levels, still show elevated demand beyond those who received credits for canceled voyages. With pricing also stable, Norwegian could be profitable again as soon as 2022.
The cruise operator expects its fourth-quarter cash burn rate to rise to $175 million as it prepares its ships to return to service, but with $2.4 billion in cash, Norwegian has plenty of ballast to stay afloat until business picks up again.
After a year of lockdowns and disappointment, the travel and tourism industry could be primed for a rebound. So long as you understand this is an early play on the recovery thesis, Norwegian Cruise Line stock could be positioned to be a top coronavirus recovery pick.