Is the domestic economy inching back? The answer to that question is yes. This means that individuals and families are likely to begin spending more for things like island vacations and other non-essentials. This should bode well for the cruise ship operators and others in the travel business, such as agents. With that in mind, today we will touch on two of the majors in the cruise line space, Carnival Corp. (NYSE:CCL) and Royal Caribbean (NYSE:RCL) in a little more detail.

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Cruise Operators Navigate Through Choppy Waters
The two big cruise operators have had to navigate through extremely choppy waters over the past couple of years and they have endured. Again, as the economy and the job situation in this country improves, the demand for cruise related vacations and all of the things that go along with them should pick up.

According to CNBC Carnival is due out with its second quarter numbers in June. Data indicates that the company is expected to earn 29 cents a share. Yours truly feels as though it will come in north of that number. The improving economy coupled with the fact that a large number of families had been holding off on vacations and big ticket purchases - and are probably chomping at the bit to take a well deserved holiday - makes me bullish. If the past is any indicator, things could go well too. The data shows that the company has navigated past Street expectations four quarters straight.

Carnival has another positive thing going for it that not too many in the investment community mention. That's the dividend. The forward yield is 1%. To be clear, that isn't a princely sum, but it's something in this environment. It also stands to reason that the company wouldn't pay it unless it had confidence in its financial wherewithal.

Also Floating My Boat
Royal Caribbean has been faring well on the earnings front too having beat out expectations for three quarters straight. Also intriguing is that the company is expected to show strong bottom line growth from this year to next. Data shows the Street expects the company will earn $1.89 a share this year in 2010 and $2.64 a share next year in 2011. That would be a more than 39% growth in EPS if achieved. And that is what justifies its current multiple in my mind. At present it trades at 17.6 times this year's estimate. (For more on analyst expectations, be sure to read Analyst Forecasts Spell Disaster For Some Stocks)

Other Ways To Play Vaca
Yours truly is not a major fan of the airlines at all. The competition is incredibly stiff and the governmental regulations add considerable costs. Instead the hotel business seems much more appetizing. Specifically Marriott International (NYSE:MAR) impresses me. It has consistently beaten out analyst expectations over the last year. As leisure travel and business travel shows return to life, its properties could do very well.

It may be an offbeat way to play travel, but Boeing (NYSE:BA) is more than a little intriguing. It trades at more than 18 times this year's estimate, which isn't cheap. However, if consumers start to spend, airlines may want to add or update their fleets of aircraft.

Bottom Line
Companies in the travel space are poised to do well as the economy recovers over time. Among my top picks are Carnival and Royal Caribbean, which are both performing on the earnings front, and which can both see strong growth in the coming years.
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