Hot and Cold Vacation Stocks for 2012

Vacations are often seen as a way to relax and get away from it all. Unfortunately, life surprises can bring even the most well-planned vacations to a halt.  Much of the same can be said about stocks. Even though investors try to get away from the market noise and place their portfolios on cruise control for the long haul, market surprises can bring even the most well-researched investing strategies to halt.

Here’s a look at popular vacation stocks and how they have performed recently:

On January 13, 2012, Carnival’s (NYSE:CCL) Costa Concordia ship hit a rock and capsized off the coast of Giglio, an island on Italy’s Tuscan coast.  Now, just six weeks after the disastrous voyage, Carnival is in hot water again.  The company’s Costa Allegra ship, carrying more than 1,000 people, lost power on Monday due to a fire in its generator room, which knocked out power throughout the ship.  The ship is currently being towed to the Seychelles, and is expected to arrive Thursday.  In a separate matter, Carnival had to suspend on-shore nature excursions in Mexico’s Puerto Vallarta after 22 cruise passengers were robbed.  According to reports, hooded attackers intercepted a tour bus last week in the town of El Nogalito.

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Shares of Carnival have taken a tumble due to the chaotic events this year.  Year-do-date, shares are down nearly 9 percent, while the S&P 500 (NYSEARCA:SPY) has gained 9 percent.  At the end of January, Barclays Capital (NYSE:BCS) downgraded the cruise company from overweight to equal weight.  The stock currently trades just under $30, where it has seen support since August 2011.  Although Royal Caribbean (NYSE:RCL) admitted that Carnival’s woes could impact its own first-quarter results, shares of the rival cruise line have gained almost 15 percent year-to-date.

When it comes to the vacation booking process, the clear leader is Priceline.com (NASDAQ:PCLN).  Late Monday, the company reported another impressive quarter.  Net income increased to $226 million, compared to $135.1 million a year earlier.  Meanwhile, revenue jumped 35.5 percent to $990.8 million in the same period.  “The Priceline Group experienced a strong fourth quarter for our travel reservation services.” said Jeffery H. Boyd, President and Chief Executive Officer of the Priceline Group. “Globally, the Group grew room night reservations by 53% as compared to 47% in the third quarter.”  Shares surged more than 7 percent on Tuesday, and have booked a 36 percent gain year-to-date.  In comparison, Expedia Inc. (NASDAQ:EXPE) has increased 18 percent for the year, while Orbitz Worldwide Inc. (NYSE:OWW) shares have fallen 8 percent.

After a dismal 2011, casino stocks have made a strong comeback.  Year-to-date, MGM Resorts International (NYSE:MGM) has jumped 32 percent, while Las Vegas Sands (NYSE:LVS) has gained 26 percent.  “2011 was a year in which we achieved many goals: operationally, strategically, and financially. Operationally, we enhanced our customer experience through targeted reinvestment in our properties and improved relationships through our M life customer loyalty program. Strategically, we acquired a majority interest in MGM China and began expanding our brand presence in key markets throughout the world, particularly Asia. Financially, our revenues and margins have improved year over year increasing our cash flow and strengthening our financial profile,” said Jim Murren, MGM Resorts International Chairman and CEO. “Going forward we expect to build off of these strategies to grow our company and maximize shareholder value.”

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com