Investors who have owned stocks in the past year have generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return over the past 12 months is 49.8%. But there is no question some big-name stocks performed better than others along the way.
Norwegian’s Big Run: One company that has been a great investment in the past year has been cruise line giant Norwegian Cruise Line Holdings Ltd (NYSE: NCLH).
Norwegian is the third-largest company in the cruise industry, and for most of the past decade, it benefited from an aging baby boomer generation. The company operates a fleet of 17 ships and controlled about 8.7% share of the global cruise market as of 2018.
Unfortunately, after a solid decade of returns, Norwegian experienced a near worst-case scenario to kick off the 2020s. The global COVID-19 outbreak shut down all of Norwegian’s operations in March of last year, and the company recently extended its cancellations of all cruises through the end of June.
In 2019, Norwegian generated $4.30 in EPS on $6.46 billion in revenue. In 2020, those numbers plummeted to a $15.75 EPS loss on just $1.28 billion in revenue.
At the beginning of 2020, Norwegian shares were trading at around $59. By the beginning of March, the stock had dropped below $38 after news of the virus spreading in China prompted concerns about a U.S. pandemic. On March 12, Norwegian shares plummeted from $15.03 to close at $9.65. Two days later, the company announced it would be suspending all cruises.
The stock fell below $8 for the first time on March 18 and ultimately bottomed at $7.03 in intraday trading.
Norwegian shares initially bounced as high as $26.91 in June on optimism cruise ships would be back on the water sooner rather than later. Unfortunately, the initial rally fizzled and the stock dropped back down to $12.56 by the end of June.
Norwegian In 2021, Beyond: In early March 2021, Norwegian shares hit a new post-crisis high of $34.49 pulling back to $30.06.
Norwegian investors who bought one year ago and held on have generated a nice return on their investment. In fact, $1,000 in Norwegian stock bought on March 16, 2020, would be worth about $2,763 today.
Looking ahead, analysts are expecting Norwegian’s stock to run out of steam again in the next 12 months. The average price target among the 12 analysts covering the stock is $29, suggesting 3.5% downside from current levels.
(Photo: Norwegian Cruise Line)
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