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The Pandemic Crushed These 2 Stocks. They're Bouncing Back Monday

By Dan Caplinger – Updated Sep 27, 2021 at 4:47PM

Key Points

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The market was mixed to start the new week.

The stock market has been somewhat choppy in September, a month that has a reputation for poor performance on Wall Street. Some of the ambivalence investors are feeling showed up in how major market benchmarks did. On the positive side, the Dow Jones Industrial Average (^DJI -0.61%) was up 241 points to 35,040 as of 10:45 a.m. EDT. The S&P 500 (^GSPC -1.11%) managed to rise a single point to 4,456, but the Nasdaq Composite (^IXIC) moved lower by 71 points to 14,977.

The COVID-19 pandemic had a huge negative impact on stocks throughout the market, and some sectors in particular have taken a long time to recover. However, cruise ship operator Carnival (CCL -2.62%) and energy giant Occidental Petroleum (OXY -1.04%) both moved higher on Monday morning, and that signals rising investor confidence that the two companies could finally be on their way toward a full recovery.

Two people dancing on a ship at sea.

Image source: Getty Images.

Cruisin' higher

Shares of Carnival were up almost 5%. The gains continued a rally over the past week that has seen the cruise ship giant's stock jump 16% from its close last Tuesday.

Carnival's gains picked up steam on Friday, when the company released its third-quarter financial results. To be clear, the cruise specialist is still struggling, having posted depressed revenue and an adjusted net loss of $2 billion. Occupancy levels came in at 54%. However, Carnival said that eight of its nine major brands have begun a gradual return to service.

Moreover, the future looks bright for the cruise industry. Carnival reported that booking volumes for future cruises remained healthy, although slightly below second-quarter levels due to concerns about the COVID-19 delta variant. Bookings for the second half of 2022 are running even ahead of where they were in 2019, before the pandemic began.

Carnival still hasn't been able to visit many ports of call, and its pricing is well below where it was during pre-pandemic operations. However, investors are pleased to hear that Carnival expects its whole fleet to be back in operation by the spring of 2022. That could finally mark a true recovery that could make Carnival's business sustainable again.

Black gold for Occidental

Meanwhile, shares of Occidental Petroleum were higher by more than 6%. The oil giant benefited from favorable market conditions, and many see Occidental as having a better opportunity than its peers to boost profits.

Just about every oil stock in the market fared well on Monday. Crude oil prices jumped almost 2%, rising above the $75-per-barrel level once again. Some see even larger gains ahead, especially as the international availability of natural gas has come under pressure and led many consumers to seek to replace gas-burning operations with those that use petroleum.

Occidental has worked hard to take advantage of rising prices to reduce the leverage on its balance sheet. The company's acquisition of Anadarko Petroleum forced it to take on a huge amount of debt, and that made 2020's pandemic-related plunge in oil prices particularly ill-timed. Since then, however, Occidental has paid down billions of dollars of outstanding debt, and it is hoping to see free cash flows return to their best levels since crude traded in triple-digit figures.

When oil prices rise, it's often the companies that have the most debt exposure that see the biggest share-price gains. That's the case with Occidental on Monday, and investors can expect outsize gains to continue as long as crude performs well.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

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