What happened

Shares of beleaguered leisure cruise company Carnival (CCL -0.34%) (CUK -0.22%) are up 8.8% as of midday today, following through on a similarly big move made yesterday. Peers and rivals Royal Caribbean (RCL -0.21%) and Norwegian Cruise Line Holdings (NCLH -0.49%) are seeing their stocks jump as well, even if not quite as much. All of the bullishness, however, sprouts from the same root. That is, Carnival finally sees a light at the end of the pandemic tunnel, anticipating a return to nearer-normal operations by the end of this year.

So what

COVID-19 has made things tough for most consumer-facing companies, but has downright brutalized the cruise industry. Forced to cancel cruises altogether during the early days of the pandemic and then operating under severe limitations as vaccination numbers rose beginning late last year, Carnival and other cruise companies remain deep in the red.

Leisure travel, however, is on the mend.

In June, for the first time in over a year, Royal Caribbean set sail from the United States. Norwegian isn't far behind, announcing in June that it would also be reinstating departures from the United States this month. On Monday, Carnival announced that by the end of July it will be operating five ships from the U.S., with plans to add three more ships to its active fleet in September and then another four in October.

A cruise ship setting sail.

Image source: Getty Images.

Carnival, however, upped the ante on Tuesday, announcing it believes its entire fleet of Carnival-branded ships will be sailing again before the end of the year, allowing the company to operate at 75% of its total guest capacity. Factoring in its cruise lines not operating as Carnival, the organization believes it will be able to operate at 65% of its total capacity before the end of 2021. It's the first major cruise name to offer not only such a bold outlook, but also a specific and visible one. Investors are responding.

Now what

Prospective shareholders should bear in mind that shares of all of these aforementioned leisure cruise names fell dramatically in June and in the first half of July, as the delta variant of COVID-19 renewed the pandemic's spread. All told, Carnival stock fell 37% from its early June high to Monday's close, setting up at least some of the 14% gain the stock has logged between Tuesday and today. Don't be too impressed by the sheer size of the bullish bump.

Nevertheless, it's difficult to ignore that even with this week's decided bullishness, most of the recent pullback has yet to be reclaimed at a time when the industry looks as promising as it's looked in over a year.

Don't confuse promise with profitability, though. Restarting mothballed operations can take a while, and isn't cheap or easy. There's no assurance that Carnival and its peers can turn a profit operating at capacities not nearer 100%. One also has to wonder if the labor shortage standing in the way of a full reopening of land-based businesses will also be a problem aboard ships, where it's more difficult to avoid exposure to potentially infected individuals.

From a risk-versus-reward perspective, though, Carnival, Royal Caribbean, and Norwegian Cruise Line Holdings all have something to offer new investors. That's near-term progress toward a return to long-term profitability, which is often enough to get -- and keep -- a stock moving in a bullish direction.

To this end, in its 2021 outlook, the Cruise Lines International Association notes that 2 out of 3 regular cruise-takers are willing to cruise within a year, while nearly three-fourths say they're likely to board a boat within a few years. Perhaps the most promising of the CLIA's findings is that 58% of international travelers who have never taken a cruise before are likely to do so in that same "next few years." In this same vein Carnival reported at the beginning of this year that bookings for the first half of 2022 were already ahead of 2019's comparable booking levels, confirming that people are indeed ready to travel. It's just a question of when, which is largely a matter of putting the pandemic in the rearview mirror.

In the meantime, cruise stocks make for compelling (albeit speculative) investment prospects.