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Author: Raylanw Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 489  
Subject: Insider Trading and Upgrades (RCL) Date: 8/26/2011 3:10 PM
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Hey all,

I feel like this stock has been forgotten over the past year and perhaps it was for the better if some of you have seen the trend. The price has fallen roughly 50% over the past few months, but I feel the underlying reasons behind this drop don't reflect the company's true value. In addition to the general market drop over the past couple of months, the catalyst to the price drop was an "accounting error" relating to PY figures which have no effect on current year or forward earnings to my knowledge. If that wasn't enough, RCL was also downgraded earlier this week which shook investor confidence in this stock even more. As a disclaimer, I pay little attention to analyst upgrades and downgrades thanks to Peter Lynch's literature, but it seems to float the general public's collective boat.

Now for the better news, RCL was upgraded today by analysts and the CEO also decided to buy roughly 66,000 shares. See link:
http://www.gurufocus.com/news/143723/royal-caribbean-cruises...
As opposed to analyst upgrades and downgrades, I do like seeing insider buying activity so I know that the executives are also bullish on the company. As you can see, there has been a LOT of insider buying recently. Despite the fact that the stock continued to fall, insider buying continued all the way down. I feel more comfortable supporting this stock knowing that the head honchos over there have confidence that the stock and company will do better in the future. It also doesn't hurt that the stock is just about at it's 52 week low which doesn't seem logical.

I will be the first to admit that my fundamental analysis is very basic at this point (I started investing in May...still learning day by day). I remain confident in this company but if someone could provide a little bit of advanced financial analysis on this company, I'd really appreciate it.

-Ray
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Author: rev2217 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 484 of 489
Subject: Re: Insider Trading and Upgrades (RCL) Date: 8/29/2011 1:06 PM
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Ray,

Now for the better news, RCL was upgraded today by analysts and the CEO also decided to buy roughly 66,000 shares. See link:
http://www.gurufocus.com/news/143723/royal-caribbean-cruises...


I'm glad to know that Mr. Fain and I are on the smae page with regard to this company. I increased my position from 3,000 shares to 4,000 shares last week, at about the same price point, to rebalance my portfolio.

As opposed to analyst upgrades and downgrades, I do like seeing insider buying activity so I know that the executives are also bullish on the company. As you can see, there has been a LOT of insider buying recently. Despite the fact that the stock continued to fall, insider buying continued all the way down. I feel more comfortable supporting this stock knowing that the head honchos over there have confidence that the stock and company will do better in the future. It also doesn't hurt that the stock is just about at it's 52 week low which doesn't seem logical.

This is a stock that invariably sees overreaction to economic bad news, yet the company's ships continue to sail very full even through the worst of times -- perhaps because those who might have gone to resorts opt for a cruise instead, the cruise being less expensive.

This stock clearly has a lot of upside potential, but be cautious. There's nothing to stop it from going back to its 2009 bottom -- which was about $5.70 per share IIRC -- if another panic sets in. The goal is to buy enough so you can sell half of your position after it doubles, thus recouping your original investment, and still have a reasonable position. OTOH, you need to some "dry powder" (cash on hand) so you can "back up the truck" if it goes down before it goes up.

I will be the first to admit that my fundamental analysis is very basic at this point (I started investing in May...still learning day by day). I remain confident in this company but if someone could provide a little bit of advanced financial analysis on this company, I'd really appreciate it.

One of the most useful books that I have found on how to invest in stocks is Beating the Street by Peter Lynch, who was the "top dog" of Fidelity's Magellan Fund in the late 1970's and early 1980's. In the book, he describes exactly how he put the Magellan Fund at the top of the mutual fund charts. All of the techniques are quite easy to use even as a layman.

One of the most useful ways to evaluate a company is from a consumer's viewpoint, and Peter Lynch describes doing this in his book. In the case of Royal Caribbean Cruises Ltd. (NYSE: RCL), means taking a cruise (yeah, investment research is a tough job, but somebody has to do it!) so you can see its product and service first-hand. Whenever a company goes into a tailspin, it shows up in its products and services long before it shows up on the quarterly financial reporsts. Fortunately, this company offers a nice "shareholder benefit" in the form of shipboard credit on our cruises (http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9N... for official offer and http://www.rclinvestor.com/phoenix.zhtml?c=103045&p=irol... for FAQ) that makes this research a bit easier on the wallet.

If you are new to investing, I also recommend taking a look at Darded Restaurants (NYSE: DRI; http://www.darden.com for investor site). This company is a "cash cow" that's still growing at a decent pace while buying back its own shares and paying a very strong (more than 3% yield) dividend. The current price is more than triple what I paid for my first shares about a decade ago, and I expect that it will continue to be a strong performer. You'll probably find some of this company's restaurants near enough to home so you can check them out yourself, too.

Norm.

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Author: Raylanw Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 485 of 489
Subject: Re: Insider Trading and Upgrades (RCL) Date: 8/30/2011 2:29 AM
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Hey Norm,

Thanks for the reply and insight. I've been on a Royal Caribbean cruise a few times and I've been on those of their competitors as well. My family unanimously agrees that RCL was the best of the lot, which sparked my interest in this stock.

I wasn't aware that the stock hit 5.70...but it does make sense. Travel and leisure would get hurt the most in a recession logically I guess...but I'm holding this stock for 3+ years at least and I think it can do quite well in that time frame.

I actually read Lynch's other book and I just bought the book you referred on Amazon. Looking forward to it if it's anything like One Up on Wall Street! I had no idea that RCL had a shareholder benefit like that. Increases my incentive to do some "research". I'll take a look at Darded as well.

Thanks for the help, Norm! Looks like you're a regular on the RCL board. I'll let you know if any interesting news pops up.

-Ray

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Author: rev2217 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 486 of 489
Subject: Re: Insider Trading and Upgrades (RCL) Date: 8/30/2011 12:28 PM
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Ray,

Thanks for the reply and insight. I've been on a Royal Caribbean cruise a few times and I've been on those of their competitors as well. My family unanimously agrees that RCL was the best of the lot, which sparked my interest in this stock.

I gravitated to Celebrity Cruises, but... well, "same church, different pew," as they say. I also consistently find good comments about both lines on cruising web sites like CruiseMates (http://www.cruisemates.com for home page).

I wasn't aware that the stock hit 5.70...but it does make sense. Travel and leisure would get hurt the most in a recession logically I guess...

The drop was entirely due to speculative panic selling. As I said in the earlier post, the company's ships continued to operate full cruises throughout the entire recession, with fares remaining quite stable. The company did suspend its dividend, but only due to the credit crunch and consequent doubts as to availability of financing to buy new ships.

... but I'm holding this stock for 3+ years at least and I think it can do quite well in that time frame.

I think that this stock can do quite well for several decades. The cruise industry has a relatively long time constant due to the time required to build new ships, which typically remain in service for about twenty years.

Several years ago, I was at a seminar on investing. The presenter remarked that it usually takes as long for a new industry to go from 10% of its potential market to 90% of its potential market as it takes to build to 10% of its potential market. The cruise industry as we know it has existed for four decades and it is not even to 10% yet of its potential market yet.

Thanks for the help, Norm!

You're welcome!

Norm.

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Author: kmaines Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 489 of 489
Subject: Re: Insider Trading and Upgrades (RCL) Date: 2/1/2012 11:32 PM
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Ray, do you still have RCL? I bought mid last year (2011) and it is the big loser for me. I should probably bail out of 1/2 of my investment in it. I want to wait for recovery, but don't know if I am patient enough to wait that long.

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