Few industries are as hard hit by COVID-19 as the cruise industry, but the situation could change. The industry is starting to open up again, partly because of customers’ perception that Corona is gradually declining and partly because of business recognition that companies cannot live on credit forever. Cruise operators are taking precautionary measures, and measures to improve health and prevent the spread of disease in the confined spaces of a cruise ship include better ventilation systems with improved air filtration, simplified itineraries and, where possible, moving towards smaller ships. For passengers, this likely means doing without buffet lines and finding smaller crowds on board the ship. For the cruise lines this means that the restart will be slow. There are of course other questions for investors. Some of these were raised by JPMorgan analyst Brandt Montour. “We continue to see value in stocks for longer-term investors in general, especially if you think operators can sail full in 2022 with only moderate price damage,” noted the analyst. Montour picked two stocks that were worth the risk and one that investors should avoid for now. Using TipRanks’ stock comparison tool, we put the three side by side to see what these cruise lines are doing in the short term. Royal Caribbean (RCL) First up is Royal Caribbean, the second largest cruise line in the world. RCL has not stepped back to face the challenges of the pandemic directly. The company’s focus has been on maintaining liquidity and leveraging pandemic downtime to streamline and modernize its fleet. Back in June, that first priority resulted in the company renegotiating for $ 2.2. More recently, management has received a binding loan commitment from Morgan Stanley for a $ 700 million credit facility. The facility can be drawn anytime before August next year – and can even be expanded by an additional $ 300 million. These measures add significantly to RCL’s liquidity position and its ability to fund operations until ticket sales are revived. RCL has managed to avoid bankruptcy through its loan negotiations and is giving the company room to plan to resume active cruise operations. In addition, RCL, in partnership with Norwegian Cruise Lines, authored a 66-page report that was filed with the CDC earlier this summer, providing industry recommendations on how to safely restart cruises. Recommendations include the required face coverings on board the ship, daily temperature checks, and COVID tests of passengers and crew members. In his latest note on RCL, JPM’s Montour makes three important observations. First, regarding the company’s ability to get ships back on stream quickly, he says, “RCL’s current deployment position should allow the company to restart relatively quickly, but with a moderately slow / measured capacity ramp from there. On company Montour notes that “RCL believes that the boom in financial markets has helped its core customers feel relatively confident that customers have saved a lot of vacation pay for 2020 and are ready to face COVID-19 to pay ticket prices and better. “Finally, when it comes to onboard safety, Montour notes that RCL’s ships, which are 110% busy, can afford to operate at 50%. He writes that “adding an additional entertainment show and additional dining / seating will be a significant aid in managing the distancing. [The company] believes that its previous investments in onboard and mobile technology will accelerate its capabilities through distancing initiatives, and that it will not have to make as much additional investment as its peers might. To this end, Montour names RCL a “top choice” and rates it as being overweight (ie buying). (To see Montour’s track record, click here.) Overall, RCL has a moderate buy rating from analyst consensus with 7 buys, 5 holds and 2 sales. The stock is currently trading at $ 64.04; It’s a measure of how tough this niche is right now that the average price target for the stocks is just $ 58.08. (See RCL stock analysis on TipRanks) Norwegian Cruise Line (NCLH) Next up is Norwegian Cruise Line, the third largest of the world’s largest cruise lines. Norwegian entered the COVID crisis with some key structural advantages over its competition. The fleet was smaller and the ships a little newer, which meant lower maintenance costs. In addition, no new launches were planned until 2022, which also kept costs low. As with RCL above, Norwegian was also successful in terms of liquidity. As of June 30, the company had total liquidity of $ 2.5 billion and confirmed its monthly cash burn goal of $ 160 million. With a smaller fleet that needs maintenance, this is a short term sustainable situation. During the downtime, Norwegian will upgrade its ships, including installing HEPA filters in the ventilation systems, to meet higher health requirements. This was described in the company’s report to the CDC, jointly issued with RCL as described above. Montour notes that restarting cruise activity is not an option to toggle – it will take some time to restore and even longer to restore sales and earnings. Montour writes: “Once the green light is given, it will take more than 60 days for everything to work again. From there, management expects a “slow increase” and more than 6 months before the entire fleet will accommodate guests. “Meanwhile, Montour still likes Norway’s long-term outlook as he views the stock as overweight (i.e. buy). Montour represents the bullish view – Wall Street is a bit divided on this stock. There are 11 current ratings, 4 to buy, 6 to hold and 1 to sell, making the consensus rating a moderate buy. The average price target is $ 17.77, which is a modest upward move of nearly 5%. (See NCLH stock analysis at TipRanks.) Carnival Corporation (CCL) The third stock on our list of JPM picks is Carnival, the world’s largest cruise line, and the stock Montour recommends avoiding – at least for now. Last month, Carnival took action to address fleet size and maintenance costs. By the beginning of the summer the company had scrapped four older ships; In September, it announced plans to divest another 18 ships, or 12% of its total active fleet, and delay delivery of the ships on order. This is a significant cut made urgent by the company’s voluntary decision to keep the cruise suspension until at least October 31st. To that end, Arnold Donald, Carnival’s CEO, believes his company can be profitable again. With social distancing measures and ships up to 50% capacity, he assures investors that the cruise line can be better than balanced. He also notes that pre-booking data shows customers are still interested in cruises. These are key points made possible by Carnival’s position as the largest line operator in the industry. Regarding bookings, Montour notes, “While CCL’s cumulative advanced book update remained technically unchanged, the fact that it has not been further eroded (due to the continued weak bookings) is undoubtedly positive.” This is a point that doesn’t relieve short-term pain, but it is a good sign in the long run. Montour is also not particularly enthusiastic about CCL as an investment. He writes: “Our estimates are decreasing as we continue to suppress our assumptions about capacity and occupancy restoration, which is partially offset by a somewhat smaller price drop in 2021. These adjustments, as well as the higher net debt, result from the unexpectedly high cash burn of the second quarter (initial costs for setup and repatriation), our 2020 lower [outlook]”Consistent with this stance, Montour rates the stock as neutral (i.e. hold). Wall Street agrees with Montour on this point. The 15 ratings on CCL are divided into 2 buys, 10 holds, and 3 sells, giving analysts’ consensus a hold. The stock has an average price target of $ 16.06, which is a modest upward movement of nearly 6%. (See Carnival stock analysis at TipRanks.) To find good ideas for trading stocks with attractive valuations, visit TipRanks’ Best Stocks to Buy, A newly introduced tool that brings together all of TipRanks’ Equity Insights. Disclaimer: The opinions expressed in this article are those of the analysts featured only. The content is intended for informational purposes only. It is very important that you conduct your own analysis before making an investment.