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Five Grocery Store Stocks to Buy as Hedges Against Inflation, Recession

Five grocery store stocks to buy as hedges against inflation and recession offer enticing ways to protect against current economic pitfalls while pursuing…

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Five grocery store stocks to buy as hedges against inflation and recession offer enticing ways to protect against current economic pitfalls while pursuing potentially powerful profits.

The five grocery store stocks to buy feature four grocery store chains and a fund that includes shares of the best public companies within an industry that always has demand for its products to provide essential food to people. These five grocery store stocks  to buy are as close to inflation-proof as possible, since the companies can pass along increased costs to their customers as long as other retailers do likewise.

Investors interested in the five grocery stocks to buy now can purchase shares at discounted prices after U.S. equities endured their worst week since 2020. However, stocks signaled pent-up investor interest by acquiring shares as the market rallied on Tuesday, June 21, when NASDAQ surged 2.51%, the S&P 500 rose 2.45% and the Dow Jones Industrial Average gained 2.15%.

Risks Remain for Five Grocery Store Stocks to Buy as Hedges Against Inflation and Recession

None of the five stocks to buy are insulated from rising costs for shipping, fuel and labor. However, all of them are well-positioned to survive the current crisis caused by Russia’s President Vladimir blockade of grain from Ukraine, China’s continued COVID-19 lockdowns to enforce its aim for zero tolerance of COVID-19 cases and last week’s central bank interest hikes of .75% in the United States and .25% in the United Kingdom to fight inflation.

Another way to dodge a potential meltdown in an individual grocery store stock is to buy shares in an exchange-traded fund (ETF) focused on the consumer staples sector. These stocks tend to do well when the economy weakens.

“They also tend to be able to pass through price increases in inflationary times, because they sell essential goods and services,” said Bob Carlson, a pension fund chairman who also leads the Retirement Watch investment newsletter. “An ETF will include more than the grocery store chains. It also will include manufacturers who produce many of the goods sold in the stores.”

Bob Carlson, who leads Retirement Watch, meets with Paul Dykewicz.

Five Grocery Store Stocks to Buy as Hedges Against Inflation and Recession Include ETF

A “good ETF” that takes advantage of the grocery store opportunity is Consumer Staples Select Sector SPDR (XLP), Carlson said. Top holdings in the fund include Costco Warehouse Corporation (NASDAQ: COST), encompassing 9.41% of the fund, and WalMart (NYSE: WMT), accounting for 3.89% of the holdings. The fund also owns Kroger (NYSE: KR) and Walgreens Boots Alliance (NASDAQ: WBA).
XLP owns 32 stocks and has 70% of the fund in the 10 largest positions. Other top holdings are Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO) and PepsiCo (NASDAQ: PEP). The fund also offers a dividend yield of 2.33%.

The fund is down 2.19% for the past week, 2.64% for the last month, 6.80% for the past three months and 10.33% so far this year. However, it rose 2.67% on Tuesday, June 21.

Chart courtesy of www.stockcharts.com

Putin’s Policies Jeopardize Food Supply and Availability

Russia’s President Vladimir Putin, who triggered sanctions on his country by sending troops into Ukraine in violation of international law, is insisting that other nations cease their restrictions on his country’s goods before he allows grain exports to resume. Russia’s invasion of Ukraine, described by Putin as a “special military operation,” has shelled hospitals, schools, residential areas, churches, nuclear power plants, oil refineries, a theater used as a shelter and even a train transporting food for World Central Kitchen, amid reports of potential war crimes by his soldiers who have been accused of raping, torturing, kidnapping and executing Ukrainian civilians.

Russia’s restriction of the world’s food supply stems from its continuing attack and blockade of Ukraine, potentially spurring the spread of a famine beyond 140 million undernourished people in needy nations. But the five grocery store chain stocks to buy serve developed nations that can afford to pay for food, unlike many people in the developing world who are the most vulnerable to Russia’s supply chain blockades.

Target Ranks Highly Among the Five Grocery Store Chain Stocks to Buy

One of the best grocery retailers is Minneapolis-based Target Corp. (NYSE: TGT), said Michelle Connell, a former portfolio manager who heads Dallas-based Portia Capital Management. Target has a place in a long-term portfolio for a number of reasons, she added.

The company produces 20% of its revenue on groceries and has done “an amazing job” growing its online sales, Connell said. Target’s online sales specifically have risen to 19% from 9% of its total sales in the past few years, Connell continued.

Despite the stock price taking a hit after its latest financial report showed short-term inventory oversupply, Target’s management expects its sales for the year 2022 to grow and its market share to increase, Connell counseled. Plus, Target is increasing its dividend by 20% this September, so its dividend yield should rise to 3.1% from 2.6% by year end, she added.

Michelle Connell, CEO, Portia Capital Management

Target’s inventory issue should be reduced by the second half of 2022, especially after its “Deal Days,” July 11-13, Connell said.

“This will be TGT’s largest Deal Days in its four-year history,” Connell said. “This online sale takes on Amazon’s Prime Day, except you don’t need a membership.”

The stock jumped 3.88% on Tuesday, June 21, and looks comparatively inexpensive after a recent share price pullback that lowered the company’s current price-to-earnings (P/E) ratio to 12 from its long-term, historic valuation of 16. Connell pegged the estimated upside for TGT at about 30% from today’s price of $144 per share.

Chart courtesy of www.stockcharts.com

BofA Global Research cautioned that risks to Target include gross margin pressures from labor costs, investments and the rapid growth of the lower-margin e-commerce channel, as well as aggressive competition from competitors including Walmart and Amazon (NASDAQ: AMZN).

Five Grocery Store Chain Stocks to Buy Feature Walmart

Walmart Inc., a superstore chain headquartered in Bentonville, Arkansas, has slid since mid-May but now is showing some resiliency by rising 3.28% on Tuesday, June 21. Investors seeking to buy Walmart at a discount should take into account the stock has fallen 14.79% so far this year.

Chart courtesy of www.stockcharts.com

“Walmart is one of the few stores that’s likely to benefit from rising inflation, as the store offers the best discounts of any major retailer,” said Jim Woods, leader of the Successful Investing and Intelligence Report newsletters, plus the High Velocity Options and Bullseye Stock Trader advisory services.

Woods told me he recommends Walmart in the Income Multipliers portfolio of his Intelligence Report newsletter due both to its history of raising annual dividends and its five-year total return of more than 71%.

Paul Dykewicz talks to Jim Woods, head of the Successful Investing and Intelligence Report newsletters.

Downside risks, according to BofA Global Research, are the impacts of foreign exchange, pharmacy headwinds and questions about Walmart’s longer-term ability to continue gaining incremental market share, despite its hefty size and a weakening global retailing environment.

Costco Captures Place Among Five Grocery Store Chain Stocks to Buy

Costco Wholesale Corp., a membership-only, retail superstore chain headquartered in Issaquah, Washington, rallied 3.68% on Tuesday, June 21. It shows the start of a potential upturn, despite further inflation and recession risk, after the stock sank 3.59% in the previous week, 8.93% in the prior month, 19.03% in the past three months and 21.02% so far in 2022.

Good news for Costco and other brick-and-mortar retailers, such as Target and Walmart, is that spending trends for such sales have risen 4.7% since the same time last year, according to BoA Global Research. In contrast, online retail sales slipped 1.6% in the past year, even though they remain stronger on a three-year basis, including the COVID-19 lockdown period that has been scaled back with fewer government decrees to avoid exposure to the virus.

That brick-and-mortar retailer spending surge suggests support for Costco, Target and Walmart sales trends due to their “dominant U.S. store footprints,” compared to Amazon, which has a comparatively small brick-and-mortar presence, even with its Whole Food stores, from both a sales and margin perspective, according to BoA. 

Chart courtesy of www.stockcharts.com

Albertsons Earns Position Among Five Grocery Store Chain Stocks to Buy

Albertsons Companies, Inc., an American grocery store chain founded and headquartered in Boise, Idaho, has more than 2,200 retail locations. The company is a BoA buy but faces further challenges than some of its bigger and better-known rivals in the grocery store chain business.

For example, Albertsons lacks general merchandise breadth of offering, with an accompanying higher gross margin profile that warrants a enlarged valuation for large discounters such as Target and Walmart, BofA wrote in a research note. Albertsons also may benefit less from favorable demographic trends in the South, where it has lower penetration compared to Walmart, Target, Costco and Dollar General (NYSE: DG).

Another drag on Albertsons is that it has nearly $5 billion in estimated off-balance sheet underfunding of multi-employer pension obligations, according to BofA. Other downside risks that Albertsons must navigate are its presence in a highly competitive retail food industry, a higher perishable mix that brings increased inflation exposure compared to its peers, e-commerce inroads at an earlier stage than for Walmart, its unionized workforce, competition from retail discounters and exposure to gas prices if shoppers opt to reduce driving.

Nonetheless, Albertsons jumped 5.85% on Tuesday, June 21, after gaining 2.33% in the previous week and 5.31% in the previous month. However, the stock is down 19.51% in the last three months and 3.25% so far this year. 

Chart courtesy of www.stockcharts.com

Beware of Volatility With Further Interest Rate Hikes to Fight Inflation

Investors will not have a smooth recovery with the Fed still needing to raise interest rates further to cool the economy and quell inflation that rose 8.6% in the past year, based on the latest Consumer Price Index reading. Plus, investors need to be cautious about diving back into equities until the “three-headed dragon” of rate hikes, upward wage pressures and rising commodity prices have been slain to bring inflation under control, said Bryan Perry, a high-income aficionado who is a veteran of Wall Street firms and the editor of the Cash Machine investment newsletter.

The June 21 rally is a fresh bet that inflation has peaked with tough Fed jawboning, Perry wrote to his newsletter subscribers.

“The market could, and probably should, rally this week under the old rally cry of ‘whip inflation now’ by global central banks,” Perry opined. “However, the inflation rate shock of the past three months, coupled with the rally in the dollar, invites caution heading into the second-quarter earnings season, which will begin during the second week of July. I would also add that third-quarter guidance will likely be guarded and fairly opaque, as companies are citing highly fluid factors that will greatly influence year-end forecasting.”

Paul Dykewicz interviews Wall Street veteran Bryan Perry, who heads the Cash Machine newsletter.

Supply Chains Remain Vulnerable to China’s Lockdowns

A fresh Covid-19 outbreak in China is affecting the country’s technology hub of Shenzhen and spurring stepped-up testing, as well as a lockdown of certain neighborhoods. Meanwhile, the gambling mecca of Macau, an hour away by car, is enduring an outbreak of the virus for the first time this year.

Those new cases are coupled with encouraging news from major metropolitan areas of Beijing and Shanghai that have used lockdowns to curb new cases. However, the U.S. ambassador to China criticized China’s “zero-COVID” tolerance policy on June 17 for potentially causing serious damage to the global economy and foreign business with the resumption of lockdowns. However, China is seeking to contain outbreaks of COVID-19 with lockdowns, despite many other countries adopting policies to balance anti-coronavirus measures with exposure to the risk.

Disrupted supply chains for products such as rice, oil and natural gas are starting to normalize again in Shanghai, home to 25 million residents and the world’s largest port. China’s recent lockdowns have affected an estimated 373 million people, including roughly 40% of the country’s gross domestic product (GDP).

U.S. COVID Deaths Near 1.014 Million

U.S. COVID-19 deaths rose to  1,013,975, as of June 21, according to Johns Hopkins University. Cases in the United States climbed more than 225,000 in the past four days to reach 86,452,232 on that date. America holds the dubious distinction as the nation with the largest number of COVID-19 deaths and cases.

COVID-19 deaths worldwide totaled 6,321,976, up more than 4,500 the past four days, as of June 21, according to Johns Hopkins. Worldwide COVID0-19 cases have reached 540,535,654.

Roughly 78.1% of the U.S. population, or 259,198,178, have obtained at least one dose of a COVID-19 vaccine, as of June 21, the CDC reported. Fully vaccinated people total 221,924,152, or 66.8%, of America’s population, according to the CDC. The United States also has given at least one COVID-19 booster vaccine to 104.7 million people.

The five grocery store stocks to buy offer investors a chance to dodge the worst of the fallout from inflation and rising interest rates, since food is essential and price increases can be passed along by the retailers. With the highest inflation in 41 years, the appeal of such stocks is starting to gain investor interest but the road ahead could be rocky with the Fed expected to raise rates again between .75% and .50% next month to limit price hikes that are needed amid rising federal deficits, sustained supply chain disruptions and Russia’s unrelenting attacks on Ukraine.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.

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Economics

The Jaws Of Trade Squeezing The Supply Chain

The Jaws Of Trade Squeezing The Supply Chain

By FreightWaves

The jaws of the supply chain vise are squeezing trade so tight that the headache…

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The Jaws Of Trade Squeezing The Supply Chain

By FreightWaves

The jaws of the supply chain vise are squeezing trade so tight that the headache it is creating will be a whopper for logistics managers this peak season. Port congestion is growing again as a result of labor and equipment inefficiencies. Trade requires people, and what we see in the CNBC Supply Chain Heat Maps is the people component in trade is behind this latest squeeze.

Shanghai is still in the process of reopening, and while there are more green lights on the screen, the supplying of drivers and people to move and make the product is slower than normal. This is affecting the delivery of critical medical devices. 

“The manufacturing plant in Shanghai was down for 75 days because of the ‘zero-COVID’ restrictions,” explained Gerry LoDuca, president of Dukal, which sells infection-control products and has manufacturing plants in Shanghai, Wuhan and Xingtai, China. “They are now operating 24/7 and they will be caught up by the end of July. Then the products will need to be packed up, shipped to Shanghai port and moved by vessel.”

Unfortunately, this delay is one of many being experienced by global importers.

Another vise squeezing trade is Europe.

Labor strife between the German trade union ver.di and the Central Association of German Seaport Companies (ZDS) is white-hot. Almost all ports in the German Northern Sea were impacted by a second warning strike last week that lasted 24 hours.  

According to sources, a final offer of a wage increase of up to 11% in 18 months was offered. Some hope for a conciliation procedure in which politicians or a neutral person become involved in mediation.

The delays created by the latest warning strike have added to the congestion already plaguing the German ports. Container ships are currently delayed by several weeks at some German ports. Logistics executives are concerned the congestion is going to get worse, as will the availability of empty containers to be filled with trade.

“The overall situation in North European ports is deteriorating,” warned Andreas Braun, EMEA ocean product director for Crane Worldwide Logistics. “Port congestion is on the increase as well as yard occupancy. The first shipping lines like MSC are reacting to the current scenario with emergency storage surcharges for both imports and exports. These surcharges will be applied after exceeding the standard storage free time and are in addition to the standard tariffs.  Although this surcharge is currently limited to Dutch ports only, and to date only MSC has circulated communication relating to the additional fees, we can assume that other ports and shipping lines will follow.”

Ocean carrier Hapag-Lloyd issued a notice on the increased demand on trucks as a result of this labor slowdown. And Maersk reported it would “absorb” the stoppage at its German terminals, telling customers that “in the interest of minimizing any further disruption to your supply chain, we will be keeping a close eye on developments up to and during the next round of meetings between trade union ver.di and ZDS, acknowledging that further strike action is possible.”

The U.S. logistics system continues to have its own host of issues with the persistent rail problems, chassis shortages and warehouses at capacity.

“Consumer trends are changing,” explained Spencer Shute, senior consultant at Proxima. “Buying patterns have shifted from home, electronics, casual apparel to more services. We are seeing buying apparel for travel and cosmetics coming back to pre-pandemic levels. Luggage, sunscreen, bug spray, these are items in higher demand because consumers need them in their experience pursuits. Larger appliances are not being purchased anymore. It’s an interesting dynamic to see how quickly the consumer has flipped considering what is going on in the economy.”

Despite the historic volume of containers, a pullback is expected as future orders for Chinese manufacturing have dropped anywhere from 20% to 30%, according to shippers surveyed.  Lumber orders have been cut along with orders for furniture, appliances and DIY products.

“But for other sectors like garments, sporting goods and e-commerce, they are still seeing strong demands,” explained Akhil Nair, senior vice president of products for Asia-Pacific at Seko Logistics.

Steve Lamar, CEO of the American Apparel and Footwear Association, explained the continued strength in orders is a result of consumers looking to outfit themselves for experiences like back to school, back to in-office work and travel. But despite this demand, the impact of inflation is a top worry.

“We remain deeply concerned that persistently high prices — in our sector and throughout the economy — will begin to dampen consumer spending and harm American families,” Lamar said. “That is why, with consumers still being a driver for economic growth in our economy, we continue to push for the [Biden] administration to avail itself of all its own inflation-cutting tools, including relief from the high and regressive tariffs that are currently being charged on products in our industry.”

Alan Baer, CEO of OL USA, tells American Shipper the decrease in container volume is being seen.

“We are seeing drops by some customers from 30-50 FEU per week down to 10 FEU per week,” Baer said. 

The squeeze is on. Time to pop that aspirin.

Tyler Durden Thu, 06/30/2022 - 15:45

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Government

5 Top Biotech Stocks To Watch In July 2022

Amid choppy markets, could there be potential in these top biotech stocks?
The post 5 Top Biotech Stocks To Watch In July 2022 appeared first on Stock…

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Should Investors Be Watching These Top Biotech Stocks In The Stock Market Now?

Just as most people think that pandemic woes are behind us, we now have the emergence of the monkeypox. While this virus may not be as contagious as the coronavirus, there is still a real cause for concern. On Tuesday, the Centers for Disease Control and Prevention (CDC) announced the activation of an emergency operations unit for monkeypox. This signals the initial stages of a public health concern. Epidemiologist Dr. Eric Feigl-Ding believes that the number of cases could reach 100,000 worldwide by August. In light of these circumstances, biotech stocks could be gaining more attention in the stock market. 

Furthermore, the coronavirus is not going away anytime soon. Recently, the U.S. Food and Drug Administration (FDA) Vaccines and Related Biological Products Advisory Committee (VRBPAC) voted that there is a need to modify the current strain composition of available COVID-19 vaccines to target the Omicron variant. If this is approved, vaccine makers such as Pfizer/BioNTech, and Moderna (NASDAQ: MRNA) will need to provide modified boosters of their coronavirus vaccines. In fact, Pfizer (NYSE: PFE) and BioNTech (NASDAQ: BNTX) just announced a new vaccine supply agreement with the U.S. government. Under the agreement, the U.S. government will receive 105 million doses with an option of up to 195 million additional doses. With all this in mind, here are five of the top biotech stocks to note in the stock market today. 

Biotech Stocks For Your July 2022 Watchlist

Regeneron Pharmaceuticals 

biotech stocks to buy (regn stock)

First up, we have the integrated biotech company, Regeneron Pharmaceuticals. Essentially, the company discovers, invents, manufactures, and commercializes medicines for serious diseases. For the most part, its medicines and products aim to help patients with eye diseases, allergic and inflammatory diseases, cancer, cardiovascular, and metabolic diseases. REGN stock has been trading sideways over the past year. 

Having said that, the company received a boost on Wednesday as the U.S. FDA has accepted for review the EYLEA Injection supplemental Biologics License Application for every 16-week 2 mg dosing regimen. This specifically caters to patients with diabetic retinopathy. Should this go according to plan, the 16-week dosing regimen could offer patients a potentially longer treatment interval. Also, it will allow doctors to have greater flexibility to individualize treatment. Given such a positive development, should investors be paying more attention to REGN stock?

[Read More] Stock Market Today: Dow Jones, S&P 500 Falter; Walgreens Stock Slides Despite Strong Quarter

Sanofi

best health care stocks to buy now (SNY stock)

Another top biotech name making waves this week is Sanofi. The France-based company engages in the research, development, and marketing of therapeutic solutions. Over the past week, there have been several key developments that could potentially excite investors. For starters, the company and GSK (NYSE: GSK) announced positive data from their vaccine trial last Friday. The vaccine candidate is the first to ever demonstrate efficacy in a placebo-controlled trial in an environment of high Omicron variant circulation. 

Furthermore, Sanofi’s Nexviadyme (avalglucosidase alfa) has recently gained marketing authorization from the European Commission. For the uninitiated, this is an enzyme replacement therapy for long-term treatment of both late-onset and infantile-onset Pompe disease. This is a significant development because Nexviadyme is the first and only newly approved medicine for Pompe disease in Europe since 2006. On that note, would you say that SNY stock is a top biotech stock to watch?

Novavax

best biotech stocks (NVAX stock)

Following that, let us look at the biotech company, Novavax. In detail, it promotes improved health globally through the discovery, development, and commercialization of vaccines to prevent serious infectious diseases. Its recombinant technology platform harnesses the power and speed of genetic engineering. As a result, the company produces immunogenic nanoparticles designed to address urgent global health needs. That said, NVAX stock has been struggling to find its footing since the start of the year. 

During the VRBPAC meeting, Novavax highlighted data showing that its protein-based coronavirus vaccine showed epitopes across both the original strain and emerging variants. Therefore, it will be able to contribute to the generation of broadly cross-reacting antibodies. The company also provided pre-clinical data that suggests boosting with Novavax’s Omicron or prototype vaccine will induce an immune response against Omicron variants. Overall, there are reasons to believe that Novavax will close the second half of the year on a better note. With that in mind, would you consider adding NVAX stock to the top of your watchlist?

Arrowhead Pharmaceuticals 

ARWR stock

Arrowhead Pharmaceuticals develops medicines that treat intractable diseases by silencing the genes that cause them. It uses a portfolio of ribonucleic acid (RNA) chemistries and modes of delivery. Most of its therapies trigger the RNA interference mechanism to induce rapid, deep, and durable knockdown of target genes. Those following the medical space would notice that gene therapies have been gaining popularity within the industry over the past few years. Hence, it would not be surprising if investors are taking note of Arrowhead. 

As a matter of fact, the company recently claimed that its experimental drug fazirsiran can reduce the accumulation of mutant protein known as Z-AAT by 83%. This result is based on an open-label phase 2 trial involving 16 volunteers with alpha1-antitrypsin deficiency disease. For now, there is still no approved treatment for such genetic liver disease. All in all, Arrowhead appears to be making strides in the right direction. Thus, should you be keeping a closer tab on ARWR stock?

[Read More] Best Long-Term Stocks To Buy Now? 5 Semiconductor Stocks To Know

Global Blood Therapeutics

gbt stock

To sum it all up, we have the biopharmaceutical company, Global Blood Therapeutics. As its name suggests, this is a company that specializes in blood-related treatments. The company is currently focused on Oxbryta, an FDA-approved medicine that inhibits sickle hemoglobin polymerization. In addition, it is also advancing its pipeline program in Sickle Cell Disease with inclacumab, and GBT021601. Impressively, GBT stock has been on bullish momentum lately, rising more than 28% within the past month.

Not to mention, the company announced on Thursday that it initiated the Phase 2 portion of its Phase 2/3 trial of GBT021601. The study aims to evaluate the safety, tolerability, efficacy, pharmacokinetics, and pharmacodynamics of the drug. So far, the preclinical results and data have been encouraging. Smith-Whitley, the company’s head of research and development, believes the drug has “the potential to improve on the clinical results achieved with Oxbryta® at a lower daily dose.” If so, this would be a huge boost for the company as it continues to work towards its long-term goals. All things considered, is GBT stock a buy right now?

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The post 5 Top Biotech Stocks To Watch In July 2022 appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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Commodities

Will Royal Caribbean Ban a Popular Bad Habit, Add Unpopular Fee?

The cruise line’s President Michael Bayley addressed two controversial topics while cruising to Alaska on the annual President’s Cruise.

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The cruise line's President Michael Bayley addressed two controversial topics while cruising to Alaska on the annual President's Cruise.

Cruise lines face a lot of challenges that traditional hotels don't deal with. A cruise ship is an enclosed space that's moving. This means that passengers impact each other more than they might in a traditional hotel, and the cruise line has to make decisions that some passengers may not like because they support the bottom line.

In addition, cruise lines face an age-old problem that every land-based casino operator has to deal with -- people like to smoke in casinos, but non-smokers hate smoky casinos. That creates a conundrum that's easier for a large land-based casino to solve than it is for a cruise line.

A land-based casino can have meaningful smoke-free areas. That can mean having a floor or a very distinct room designated smoke-free. It's possible to have meaningful separation because you have actual separate spaces.

That's much harder to do on a cruise. In most cases, there are smoking sections on a Royal Caribbean International (RCL) - Get Royal Caribbean Group Report ship, but smoke travels and sensitive non-smokers can't avoid it. The Wonder of the Seas does have a separate smaller casino (originally meant for high-rollers when the ship was supposed to sail out of China, but that's the only ship in the fleet that has two truly separated casino areas.

It's a problem the Royal Caribbean President Michael Bayley addressed during his company's annual President's Cruise.

Image source: Daniel Kline/TheStreet

Will Royal Caribbean Ban Smoking in its Casinos?   

There was a period during the omicron variant section of the pandemic where Royal Caribbean tightened its mask rules and banned smoking in the casino. That was a practical concern because, at that time, the company was requiring customers to put their mask on between sips of a drink.

When that period ended, the cruise line reinstated smoking in its casinos. "It's a bit of a conundrum," Bayley said during a question and answer session on Ovation of the Seas during the President's Cruise, the Royal Caribbean Blog reported.

"The dilemma is that there are many people who do want to smoke in the casino. I know that's not a popular response, but it's it's the truth. I'm not judging anyone or anything, but there's a large group of people who do want to smoke in the casino," he said.

Banning smoking, which the company has tested, produces lower revenue in the casino.

"Every, I would say every couple of years, we do test this and we take one or two or three ships and we ban smoking in the casino. And the result is less people go in the casino and that's the reality of it," he explained.

Bayley does not expect a smoking ban to happen, but said the cruise line is looking at ways to make more area in the casino smoke free.

Will Royal Caribbean Add a Fuel Surcharge?

Rising gas and oil prices impact cruise lines as higher fuel costs make it more expensive to operate. In the past, when prices have surged, some cruise lines have added a fuel surcharge.

That's something Royal Caribbean has a legal right to do (it's in the long cruise contract you didn't read) but has held off so far on doing that. Bayley shut down fears of the cruise line adding one (at least right now), according to the Royal Caribbean Blog, which is not affiliated with the cruise line.

"The fuel fuel bill for Royal Caribbean is, as you can imagine, it's massive and it's gone up by I don't know what the percentages, but it's a huge chunk. It's hundreds of millions of dollars," he said. "But at the moment, we're not planning on putting a fuel surcharge on."

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