3 Reasons to Buy Royal Caribbean Stock Like There's No Tomorrow

Royal Caribbean (NYSE: RCL) stock powered some 7% higher on Wednesday after an apparent ceasefire in the war in Iran was reached between the U.S., Iran, and Israel.

It was a welcomed development for investors, and particularly good news for Royal Caribbean and travel industry stocks.

For starters, oil prices dropped on the news with the Strait of Hormuz apparently reopening, and that should bring down fuel prices and spur more travel. Second, it should relieve some of the hesitancy that people may have about traveling during a time of geopolitical conflict and war. A recent survey by Travel Weekly showed that 72% of travel advsiors said customers were hesitant to book travel because of geopolitical conflicts. This was a far bigger concern than rising travel costs.

Image source: Getty Images.

While geopolitical tensions certainly remain, if the conflict is ultimately settled, it alleviates a major uncertainty for Royal Caribbean. Otherwise, the leading cruise line is in a great position to set sail in 2026 and beyond. Here are three reasons why the stock looks like a great buy right now.

1. Record demand

Royal Caribbean had a record number of bookings during its WAVE season, which is January through March and is the peak booking period of the year.

This WAVE season, Royal Caribbean had the seven highest booking weeks in the cruise line's history, as of late January.

The cruise line also reported that about two-thirds of its 2026 capacity was already booked. Again, that was reported in late January. Furthermore, its pre-cruise guest spending is exceeding prior years with greater participation at higher prices. So, unless there was massive disruption and cancellations because of the war, Royal Caribbean is booking at a breakneck pace.

2. Higher yields and earnings

In its outlook for 2026, Royal Caribbean expects net yields to rise between 2.1% and 4.1% in 2026. The net yield is the amount of revenue the cruise line makes per passenger after subtracting certain costs.

With a record booking pace during the prime booking season, Royal Caribbean expects 6.7% higher capacity in 2026.

That would drive earnings per share to be in the range of $17.10 to $18.10, which would represent about 13% growth at the midpoint. It is also growing faster than expected, with a 23% compound annual growth rate (CAGR) over the first two years of its multi-year plan targeting 20% earnings CAGR from 2024 to 2027.

3. Low valuation

Along with its robust earnings growth expectations, Royal Caribbean stock is relatively cheap, trading at 15 times forward earnings. That puts the stock squarely in the buy zone.

Wall Street is bullish on Royal Caribbean, with some 72% of analysts rating the stock as a buy. It currently has a median price target of $366 per share, which would suggest some 28% upside for the stock over the next 12 months.

Royal Caribbean is expected to report earnings in late April, around the 24th, although an official date has not been set yet. Investors should tune in to that for more visibility on how and if travel is being affected by the global conflicts.

But with its pace of bookings, anticipated capacity and yield increases, and the certainty that the cruise line is mostly booked up already for 2026, Royal Caribbean looks like an excellent stock to buy right now.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.