Clear sailing on a cruise ship
The stock market’s winning streak continues, with the S&P 500 rising for the sixth straight week during the week ended December 8. The large-cap benchmark rose 0.2% to end the week at 4,604. The S&P 500 index is currently at its highest level of the year and its highest level since January 2022, when it hit an all-time high of 4,797 in the same month. The S&P 500 is up 19.9% year to date as of Monday’s open.
All three major indexes rose last week, with the Dow Jones Industrial Average up 0.2% and the Nasdaq Composite up 0.7%. The Dow is up 9.4% YTD, and the Nasdaq is up 37.6% this year.
Cruise ships dominated last week. The top two performers were cruise ship companies. The top three stocks in the S&P 500 last week were:
1. Carnival Corp., up 14.9%
Carnival Co., Ltd. (NYSE:CCL) was one of the best-performing stocks in November, up 39.5%, and that momentum continued into December. Cruise companies have seen a surge in bookings throughout the year, driven by two main factors: pent-up demand since the pandemic and the relative discounts they offer compared to land-based holidays.
But the company got a further boost over the Thanksgiving holiday as several cruise lines set record bookings. British luxury cruise line Cunard received its most bookings ever for Black Friday. Princess Cruise Lines, an all-inclusive ship, set a record for bookings for the week of November 20-27, and Holland America set a record for bookings in the United States. Black Friday reservations increased 20% compared to the previous year, reaching an all-time high.
Carnival stock is up 125% YTD and is trading at around $18 per share.
2. Norwegian Cruise Line Holdings, up 13.8%
Many of the same factors that led to Carnival also Norwegian Cruise Line Holdings (NYSE:NCLH) had a great week. The cruise line’s shares have surged 13.8% during the week and are currently trading at about $18.70 per share. This represents an increase of approximately 52% YTD.
There hasn’t been a specific catalyst for the company, but it continues to surge after reporting record revenue of $2.5 billion in the third quarter, up 33% from the same quarter in 2019 before the pandemic. Norway is benefiting from rising prices as well as pent-up demand.
Additionally, fourth quarter bookings are at record levels and Norway is within the optimal booking position for the next 12 months.
3. Walgreens Boots Alliance, up 11.4%
pharmacy chain Walgreens Boots Alliance (NYSE:WBA) has had a rough few years, and is down nearly 38% YTD. But last week the stock rose 11.4% to about $23 per share.
That’s likely not because of anything Walgreens did, as the stock soared last week following sound guidance issued by rival CVS (NYSE:CVS). At its investor day on Dec. 7, CVS introduced several new plans, including a new pharmacy reimbursement and pricing model, but more importantly, it shared somewhat optimistic guidance for 2024.
By 2024, CVS is calling for $366 billion in sales, a 2.1% to 4.2% increase over its projected 2023 sales. Operating income is expected to increase by 7.1% to 10.3% to approximately $15 billion, and earnings per share are expected to increase by 9.8% to 14% to $7.26 per share in 2024.
It’s yet to be seen whether these types of results will translate to Walgreens, but it was enough to give investors a positive view of the company last week. The stock really can’t go much lower, with a very cheap price-to-earnings ratio of 5.9 and a price-to-earnings ratio of 0.14.
Fed plans last meeting in 2023
As always, last week’s results are intended to provide a short-term snapshot of market trends. Research the long-term prospects for the stock.
This could be an interesting week for the markets as the Federal Reserve is scheduled to hold its last meeting of 2023 on Tuesday and Wednesday. The market will be watching to see what happens to interest rates. Inflation data, as measured by the Consumer Price Index, will also be released on Tuesday.
