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With many industries having to revamp their business model due to COVID-19, How will two titans in the Cruise Line industry tackle the pandemic? Will Royal Caribbean Cruises (RCL) and Norwegian Cruise Line Holdings (NCLH) return to their success before the pandemic, or are they permanently damaged?
This is Sailesh Tirupasur. I'm a part of Stock Card's summer internship program in 2020, and this post is a part of my Stock Battle series. I don't own these two stocks, and my goal here is to study them to decide whether to invest or not.
Stock research and analysis
Cruise Line stocks are in an extremely volatile position at the moment due to difficulties being presented by the pandemic. Royal Caribbean and Norwegian Cruise Line stocks, the world's second and third largest cruise companies, are down around 6% and 5% today. However, many experts are saying that cruise stocks could be an interesting long term play since their stock price has fallen so low. Before COVID-19, the cruise industry was enjoying some of the most robust industry growth rates outside of the technology sector. According to a graph from cruising industry trade group cruising.org, the number of global ocean cruise passengers has grown by an average of 5.36% annually since 2009. Industry group Cruise Lines International Association had even projected an acceleration to 6.7% growth in 2020 before the pandemic. Some investors are clinging to the hope that once normalcy returns, the cruise line industry will see the return of these high growth numbers, while other investors are concerned with just how much damage COVID-19 could happen due to the industry. Health authorities have banned ships with more than 250 passengers from sailing from the U.S., the sector's largest market. Royal Caribbean also has built up a numerous amount of debt over the years due to acquiring other smaller cruise lines over the years. According to the quarterly report, Royal Caribbean has around 12 billion dollars in debt while also not being able to resume business until September, most likely. Norwegian Cruise Line, on the other hand, has 6 billion in debt and is the smaller of the two companies.
Final Decision
My pick of the day is neither of the two stocks. However, I would watch Norwegian Cruise Line Holdings for now. It has a lower debt as well as an extremely low price point compared to Royal Caribbean Cruises (RCL). However, investing in both companies seems to be a bit of a gamble right now because the impact of the COivd-19 pandemic is still in full force.
We are looking at Alexion Pharmaceuticals (ALXN) today.
Why Alexion Pharmaceuticals (ALXN) shares fell more than 3% today?
Shares of Alexion Pharmaceuticals lost more than 3% on Wednesday. The SEC is fining the company for bribing foreign government officials to receive favorable treatment. The company's subsidiaries from 2010 to 2015 in Turkey and Russia from 2011 to 2015 bribed officials and maintained false records of such payments. The fine is adding up to a bit more than $20 million, but investors hate such dealings with the SEC, as they should. And, the stock is paying the price.
The company is still a very well-managed, cash-rich pharmaceutical that develops treatment for rare diseases such as multiple sclerosis (M.S.). Its SOLIRIS® (ECULIZUMAB) is a leading drug in the U.S. Assuming that this bribery case doesn't snowball to a bigger fraud, the stock is hovering in an undervalued range that may be worth adding to your watchlist. Check out the company's Stock Card to see the evidence of its strong operations.
The recent news of Walmart's subscription program ignites the old Walmart (Ticker: WMT) vs. Costco (Ticker: COST) debate. Aside from the launch of Walmart+, the question is whether these retail giants benefit from the pandemic? And whether their performance during the COVID-19 pandemic justifies adding to our portfolio?
This is Sailesh Tirupasur. I'm a part of Stock Card's summer internship program in 2020, and this post is a part of my Stock Battle series. I used to publish them every day in our private user community, and I'm expanding them to the blog as of July 8th, 2020.
Stock research and analysis
Costco and Walmart are two of the biggest retail store chains in the United States. While the retail industry seems to be shrinking due to pandemic difficulties and the rise of online shopping, these two retail giants seem to still be going strong.
Costco has recovered from a 30% year-over-year drop in-store visits in April to only a 6.5% drop in June. Moreover, with Texas, Florida, and Arizona seeing a massive rise in cases of COVID-19, Costco is one of the first places consumers visit to stock up on anything from food to household appliances. Costco has seen significant success with its membership model, and almost 20% of all its members are part of their more expensive business membership. On top of that, the wholesaler last reported May sales numbers on June 3 that show a 5.5% U.S. sales jump from the same month last year. Walmart is planning to announce its own membership program later this month called Walmart+, and is expected to offer several perks designed to get customers to shop more often. This has investors excited as loyalty programs like Amazon Prime or Walmart+ tend to lock customers into longer-term relationships with the company. However, some experts are relatively cautious due to the amount of expenditure required in replicating Amazon's delivery system. Amazon has seen nearly a 30% increase every year in delivery costs, which seems to keep going up.
Final decision
While Walmart+ program seems quite promising for the massive retail store, I would have to go with Costco as a safer investment. Costco has a better performance against the overall market and already has a tried-and-teste membership model with many loyal customers. It's a safer bet.
We are looking at Livongo (LVGO) today.
Why Livongo (LVGO) stock jumped today?
Shares of Livongo Health were up more than 20% on Tuesday. The company announced a preliminary second-quarter report, and revenue growth is exceeding everyone's expectations.
If you don't know the company, this might be a good time to add it to your watchlist. The company is a technology platform provider for the detection and prevention of diabetes in the United States. The company's solution expands into other medical conditions, such as weight management. Livongo is not profitable but has more than a 70% gross margin. With no debt on its balance sheet, it continues to fund its growth without worrying about cash. The COVID-19 pandemic has helped the company grow even faster ad more employers are looking for digital ways to help their employees manage their health. Check out the company's Stock Card to have an eye on it:
We are looking at Dominion Energy (D) today.
Why Dominion Energy (D) stock fell today?
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