Top stocks of the week: Clear sailing for cruise ships

The stock market’s winning streak continues as the S&P 500 rose for the sixth straight week for the week ended Dec. 8. The large-cap benchmark finished the week at 4,604 after climbing 0.2%. The S&P 500 is now at its highest level all year and the highest since January 2022, the same month it hit an all-time high of 4,797. The S&P 500 is up 19.9% year to date as of Monday’s opening bell.

All three major indexes were up last week as both the Dow Jones Industrial Average ticked up 0.2% and Nasdaq Composite climbed 0.7%. The Dow is up 9.4% YTD while the Nasdaq has surged 37.6% this year.

Last week was dominated by cruise lines, as the top two performers were cruise ship companies. Here are the top three stocks on the S&P 500 last week.

1. Carnival Corp., up 14.9%

Carnival Corp. (NYSE:CCL) was one of the top-performing stocks in November, up 39.5% for the month, and that momentum continues in December. The cruise-line company has seen a surge in bookings all year, driven by two major factors: post-pandemic pent-up demand and the relative discount they are providing over land-based vacations.

However, the company got an added boost over the Thanksgiving holiday as several of its cruise lines set records for bookings. Cunard, the luxury British cruise line, had the most bookings ever on Black Friday. Princess Cruise Lines, an all-inclusive ship, set a record for bookings for the week of Nov. 20-27, while Holland America had record bookings in the United States. Booking volume was 20% higher on Black Friday than the previous year, which had been the previous record.

Carnival stock is up 125% YTD, trading at about $18 per share.

2. Norwegian Cruise Line Holdings, up 13.8%

Many of the same factors that drove Carnival also carried Norwegian Cruise Line Holdings (NYSE: NCLH) to a stellar week. The cruise line’s stock price shot up 13.8% for the week and is now trading at about $18.70 per share. It is up roughly 52% YTD.

There was no 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. Norwegian is not only benefiting from pent-up demand but also higher pricing.

In addition, bookings for the fourth quarter are at record levels, and looking out over the next 12 months, Norwegian is within its optimal booked-position range.

3. Walgreens Boots Alliance, up 11.4%

The pharmacy chain Walgreens Boots Alliance (NYSE: WBA) has had a rough couple of years and is down almost 38% YTD. However, its stock rallied last week, gaining 11.4% to about $23 per share.

It likely wasn’t due to anything Walgreens did, as the stock probably jumped on healthy guidance released by its rival CVS (NYSE:CVS) last week. At its investor day on Dec. 7, CVS introduced some new initiatives, including a new pharmacy reimbursement and pricing model, but more importantly, it shared somewhat bullish guidance for 2024.

For 2024, CVS is calling for revenue of $366 billion, which would be 2.1% to 4.2% over the projected 2023 revenue. Its operating income is expected to rise by 7.1% to 10.3% to around $15 billion, while its earnings per share is projected to rise between 9.8% and 14% to $7.26 per share in 2024.

Whether or not these types of results translate over to Walgreens remains to be seen, but they were enough to give investors a positive view of Walgreens last week. The stock really can’t go much lower, with its dirt-cheap price-to-earnings ratio of 5.9 and price-to-sales ratio of 0.14.

The Fed set to meet for the final time in 2023

As always, last week’s results are meant to provide a short-term snapshot of trends in the market. Be sure to do your research on the longer-term prospects for these stocks.

This could be an interesting week for the markets as the Federal Reserve is scheduled to meet for the last time in 2023 on Tuesday and Wednesday. The market will be watching what it does with interest rates. Inflation data as measured by the Consumer Price Index is also due out on Tuesday.