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Royal Caribbean Cruises Ltd. RCL is benefiting from solid booking volumes on the back of strong cruising demand from new and loyal guests. Furthermore, growth in fleet additions and technological innovations are adding to the uptrend.

Shares of this current Zacks Rank #2 (Buy) company surged 123.1% in the past year, outperforming the Zacks Leisure and Recreation Services industry’s 19.3% growth. The uptrend is most likely attributable to a rise in consumer spending onboard and pre-cruise purchases, which is reflected in robust booking trends.

The company’s earnings estimate for 2024 has moved north in the past 30 days to $10.01 per share from $9.75, showcasing growth rate of 47.9% year over year. Furthermore, the earnings growth rate of the first quarter of 2024 is a whopping 665.2% year over year. RCL also delivered a trailing four-quarter earnings surprise of 26.4%, on average. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and the continuation of an outperformance in the near term.

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What Makes the Stock Attractive?

Robust Booking Trends: Royal Caribbean’s booking trends are benefiting from exceptionally high guest satisfaction scores that attracted a record number of both new and loyal guest bookings. In 2023, the company witnessed guest bookings that were double the 2019 numbers, which reached a record number in terms of pricing and volumes.

Load factors in the fourth quarter of 2023 were 105%, indicating full capacity operations across commercial channels, especially in direct-to-consumer avenues. Also, solid contributions from travel partners and robust demand from North America added to the positives. RCL stated that the momentum has continued into 2024, with booked load factors and rates surpassing the previous years. Early booking patterns and heightened onboard spending reflect active consumer engagement, positioning the company well to outperform the broader travel industry and attract new clients.

Fleet Additions Bode Well: RCL consistently focuses on new innovative ships and onboard experiences to differentiate its offering as well as deliver superior yields and margins. During the fourth quarter of 2023, the company reported solid performances regarding the same, with Icon of the Seas particularly standing out with strong demand and pricing.

In 2023, RCL unveiled three new ships that align with its strategy and are poised to generate higher yields from 2024 onward. The new vessels not only enhance vacation experiences and attract fresh customers to the company's brands but also contribute to yield improvements and overall profitability. For 2024, the company expects its capacity to increase 8.5% year over year with the introduction of Utopia of the Seas and Silver Ray.

Technological Advancements: The company’s focus on strategic technological advancements is encouraging, given it enables it to enhance its marketing procedures, product development and consumer experience. These include revamped websites, new vacation packaging capabilities, support for mobile apps and increased bandwidth onboard to help its guests remain well-connected while at sea. WiFi and customized destination experiences, as well as other ship upgrades, are also paying off. The company emphasized investing in a modern digital travel platform to streamline the vacation booking process for customers and expand wallet share.

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Ralph Lauren Corporation RL presently sports a Zacks Rank of 1. RL has a trailing four-quarter earnings surprise of 18.7%, on average. The stock has surged 70% in the past year.

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