We recently published a list of Jim Cramer’s Latest Portfolio: Top 10 Stocks to Watch. In this article, we are going to take a look at where Royal Caribbean Cruises Ltd. (NYSE:RCL) stands against other top stocks to watch from Jim Cramer’s latest portfolio.

Jim Cramer in a latest program on CNBC said that pain is “inevitable” in the stock market as investors go through the volatility infused by the latest tariffs announced by the US government against China, Canada and Mexico. However, Cramer said investors should get used to this volatility and be ready for different situations.

“Commerce Secretary Howard Lutnick said in the last of his myriad interviews of the day that maybe the Canadian and Mexican tariffs could be partially rolled back, perhaps as soon as tomorrow. Yes, it is all that capricious, and you better get used to it if you’re going to own stocks,” Cramer said.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In

For this article, we picked 10 stocks Cramer has been talking about recently. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Royal Caribbean Cruises Ltd. (NYSE:RCL)

Number Of Hedge Fund Investors: 58

Royal Caribbean Cruises Ltd. (NYSE:RCL) is one of the stocks Jim Cramer recently recommended during his show on CNBC while discussing sectors benefiting from strong travel demand.

“Or buy the stock of Royal Caribbean. It keeps beating the numbers—beating numbers and beating numbers again. The cruise lines haven’t been cyclical since COVID.”

Recurve Capital stated the following regarding Royal Caribbean Cruises Ltd. (NYSE:RCL) in its Q4 2024 investor letter:

“Cruise companies (Royal Caribbean Cruises Ltd. (NYSE:RCL) and NCLH) – 12% of assets as of 12/31/2024

The cruise lines are disruptive in the vacation market. They offer extraordinary, high-satisfaction experiences at great value compared to land-based alternatives. The scale of demand they generate in their businesses allows them to build bigger and better assets, including new portfolios of private destinations which elevate satisfaction while keeping customers (and their wallets) captive within the cruise ecosystem all day. These private destinations magnify the returns of all the vessels that visit these destinations and improve ROIC across their asset portfolios. They have meaningful opportunities to continue these and other innovative expansions over the coming decades. I recommend reading our recent Insight about RCL’s private resorts.

With only 2% market share in vacations and less than 10% of all Americans ever having taken a cruise (but with high repeat rates), the sector has a long way to go before it reaches maturity – especially as the operators keep elevating the quality of the assets and the experiences they can deliver to guests. There remains a significant price differential between cruise vacations and their land-based alternatives, but cruising is not just a value play. The experience is unique and compelling outside of its superior economic value. These are not like customers looking to trade down from a Ritz Carlton to a Marriott to save money – these are vacationers looking for a unique experience that only cruising can deliver.

RCL and NCLH trade at relatively modest P/E multiples. They have highly visible future capacity growth since newbuild pipelines are contracted years in advance. Their normalized growth algorithm is straightforward and reminds me of the old cable equity algorithm (back when there was growth in cable!): modest capacity growth + modest pricing growth + cost growth below inflation = HSD/LDD revenue growth and LDD-mid-teens earnings growth. If we layer on accretive balance sheet actions that are now opening up in the post-Covid recovery period (reducing interest expense and returning capital to shareholders), we can get to >20% medium-term EPS CAGRs.

Both RCL and NCLH trade at undemanding valuations because most investors treat them as cyclicals trading at or near peak earnings or peak pricing power. There will always be periods of relative strength and weakness, but the long-term trendline on pricing is up – well above inflation. It would take a severe recession for pricing to turn negative.”

Overall, RCL ranks 8th on our list of top stocks to watch from Jim Cramer’s latest portfolio. While we acknowledge the potential of RCL as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RCL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.