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Cruise lines: operating leverage plus financial leverage powers ocean-goers

Shares are soaring but debt levels mean investors should worry about sector running out of steam

Ships tend to make better speed by jettisoning ballast, not adding to it. But some of the best-performing stocks of 2023 have been large cruise lines, now freighted with debt from pandemic shutdowns.

The likes of Carnival, Royal Caribbean and Norwegian were at risk of running aground in 2020. A lacklustre recovery followed in 2021 and 2022. Holidaymakers appeared reluctant to maroon themselves on floating islands where new and old pathogens can jostle for pre-eminence.

Yet the buffets, campy entertainment and shuffleboard have proved as irresistible as a siren’s song. The shares of the trio of big cruise operators have each about doubled so far in 2023.

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