3 Reasons to Buy Carnival Stock Like There's No Tomorrow

Once upon a time, not so long ago at all, Carnival (NYSE: CCL)(NYSE: CUK) was a reliable market-beating stock with a dominant position in the cruise industry and consistently increasing sales.

After the pandemic, all of that is still true, except the market-beating part. However, there are good reasons for investors to be confident in Carnival continuing its rebound and becoming a solid part of a great portfolio.

Here are three reasons to buy it today.

Image source: Carnival.

1. Demand is strong

Over the past five years or so, as Carnival has made its way back, there have been warnings about how long it could sustain high demand. Armchair analysts (and real ones) were concerned that it would slow after an initial rise or that inflation would make an impact, but demand continues to remain extremely healthy.

In the 2025 fiscal third quarter (ended Aug. 31), revenue increased 4% to a record $8.2 billion. It had record third-quarter customer deposits of $7.1 billion, which included a longer booked position at higher prices and increased pre-cruise onboard sales. Those are some of the extras besides the cost of the tickets themselves.

Half of 2026 is already on the books, and even 2027 is already booked at record volumes. Occupancy is in line with historical highs, and ticket prices also remain at historical highs.

This is more than a rebound; this is sustained momentum. Carnival is demonstrating why it's the leader in the industry.

2. Management is investing in the future

As sales have come back in a big way, Carnival has become profitable again per generally accepted accounting principles (GAAP), and the company reported a record $1.9 billion in net income in the third quarter. Free cash flow is positive and stable at $736 million in the quarter.

This gives management the ability to really invest in the company strategically and put it into a position to keep growing.

It's making many different moves. It's already the largest cruise company in the world, with 90 ships operating under various lines, including Carnival, Aida, and Princess. It recently anointed a new Princess ship, and it has another ship per year on order from 2027 through 2033.

One of the ways it attracts guests, both new and repeat, is through exclusive destinations. It has the highest footprint of any cruise company in the Caribbean, and it recently launched a new exclusive asset called Celebration Key, which has at least one ship docked nearly every single day of the year and two ships docked 85% of the year.

It's always adding new attractions and events on its ships, and it recently revamped its loyalty club to appeal to high-frequency guests.

3. The debt is shrinking

Despite its impressive performance, Carnival stock is up only 4% this year, trailing the broader market. There are a number of reasons why. First, it's already made quite a comeback, up 170% over the past three years. It's still 64% off its all-time highs, but the market is treading carefully because of the debt.

At today's price, Carnival stock trades at a price-to-sales ratio of 1.4. There's still concern about the company's high debt, and the market will likely not price the stock higher until there's more progress.

However, management is making strides in paying it off. It's now nearly $10 billion off its highs, and as interest rates continue to decline, it will be easier to pay down the debt.

The debt doesn't need to be completely extinguished; Carnival has always carried some kind of debt, and that's not unusual for large companies, especially if they pay a dividend. Carnival has still not reinstated its dividend, although that might happen eventually.

As soon as the debt goes down to a level that the market feels comfortable with, the stock price can easily carry a higher valuation and rise. And as it continues to perform well, investors can expect the stock to reflect that.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.