The Carnival (LSE: CCL) share price has been rising over the past few months. Year-to-date, shares in the world’s largest cruise ship company have added 28%. Over the past 12 months, the stock has added 66%.
I think this trend can continue and, as a result, I’m considering adding the stock to my portfolio today.
Turning a corner
I sold my investment in Carnival early last year after it became clear the coronavirus pandemic would have a more significant impact on the cruise industry than I initially thought.
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Since then, I have been keeping a close eye on the company and its competitors for signs of a turnaround. While cruise ships have been allowed to sail from US ports for several months, operators have erred on the side of caution. That’s understandable.
Operators have also attracted a large amount of criticism over the past year for continuing to sail as the pandemic spread around the world in the first half of 2020. Lawsuits have been mounting ever since. Managements will want to avoid a repeat of this situation, which has hurt the Carnival share price.
However, the group is now slowly restarting operations. P&O, which Carnival owns, has a lengthy itinerary in place over the summer for cruises around the UK.
One of the group’s European subsidiaries, AIDA Cruises, also has them scheduled around the Mediterranean, North Sea and Baltic Sea over the next few months. Demand for these cruises has been so high, the company has had to put on additional trips.
And today, Carnival also announced three brands across the group have restarted cruises from the United States to Alaska.
The company will release more information on its restart plans next week. Management is finalising plans to operate several of its ships from ports in Miami and Galveston, Texas.
Carnival share price outlook
This is all good news and signals that the company is finally starting to move on from the pandemic. I think this will almost certainly have a positive impact on the Carnival share price. For much of the past year, the group hasn’t generated any substantial ticketing revenue.
That will change over the next few months. And when revenue starts to roll in, I’ll be able to build a better idea of the company’s financial position and how long it will take the business to recover.
Of course, the company’s recovery still faces multiple headwinds. Most of its voyages won’t stop in ports due to the risks of spreading coronavirus. It’s unclear how long this will last and whether customers will continue to return if they’re not allowed to disembark at key destinations during a trip.
What’s more, another coronavirus wave may lead to the reintroduction of no-sail orders, which would almost certainly impact sentiment towards the Carnival share price.
Despite these risks, I think the outlook for the company is improving. As such, I’d be happy to buy a small position for my portfolio today as an economic recovery play.
