But startup costs associated with these ventures are crimping near-term earnings growth. In addition, moves into electronics have been hindered by chip shortages, which is limiting the supply of the most popular toys during the holidays. So the more traditional and perhaps more value-oriented parts of the equation have been affected. I feel that way partly because there are some extraordinary values that can be had in the sector, and partly because if we do have a soft landing, much of this is already factored into the stocks. Carnival is the dominant player in the cruise industry, trading at an attractive valuation, further supported by an EVA analysis that we recently completed on the cruise industry.
Carnival has a track record of better navigating through choppy waters.
Carnival also has much less operating leverage than Royal Caribbean, making it significantly more attractive in the current environment. Carnival also has the benefit of being able to fund all of its new ship expansion from internally generated funds. In contrast, Royal Caribbean is a play on a very bullish industry backdrop for the cruise industry. Royal Caribbean has an aggressive capacity expansion program under way. Each new ship adds substantially to its earnings potential.