Dozens of stocks more than doubled in the first half of this year. Most of them won't repeat the feat through the final six months of 2023, and many of them might surrender some of their sizable year-to-date gains. Let's single out a few names that could double again in the second half.
Carnival Corp. (CCL +0.57%), Royal Caribbean (RCL +0.68%), and Duolingo (DUOL +0.96%) have delivered wealth-altering gains so far this year. They have all more than doubled, but the upticks don't have to end there. Let's take a closer look.
NYSE: CCL
Key Data Points
1. Carnival: Up 134%
They say that first impressions matter, but sometimes Wall Street holds out for a second opinion. Carnival stock tumbled 8% last Monday after posting seemingly reasonable quarterly results that morning. The stock would go on to soar 29% during the final four trading days of the week after investors began to appreciate the blowout performance.
Carnival delivered better-than-expected results on both ends of the income statement. It took the world's largest cruise line operator more than three years to take out its pre-pandemic highs, but it's finally here. It posted record second-quarter revenue along with all-time highs in bookings and customer deposits. A lack of profitability has been a problem, but after 14 consecutive quarterly deficits, Carnival's guidance calls for healthy positive earnings in the current fiscal quarter.
Image source: Getty Images.
At least six analysts would go on to jack up their price targets on Carnival after last week's promising financial update. It's fair to say that cruise line stocks are back. The industry is finally enjoying the "revenge travel" bump that other vacation businesses experienced in 2021 and 2022.
It will take time for Carnival and its peers to eat into the new debt and issued shares that they had to resort to when they were shuttered for a lot longer than other forms of travel. However, Carnival is already starting to pay off some of its more troublesome debt. Its flexibility to run a tighter ship -- metaphorically speaking -- should only improve from here.
2. Royal Caribbean: Up 110%
If Carnival is partying on the pool deck again it's only right to expect its closest rival to be following suit. Royal Caribbean has always been a darling among the publicly traded cruise lines. It has historically delivered stronger margins than its peers, and it has a loyal fan base for its product.
The stock is reasonably priced despite more than doubling this year. It's trading for less than 15 times next year's projected earnings, and those targets could prove conservative. Royal Caribbean has trounced bottom-line expectations by a double-digit percentage margin in each of its last three quarters.
3. Duolingo: Up 101%
If folks are thirsty for visiting exotic ports of call on cruise ships they may want to brush up on the local lingo. Duolingo runs a popular language-learning app with 72.6 million active users, up 47% just over the past year. You know engagement is on the rise because metrics for its biggest fans -- a 62% increase for its daily active users and a 63% bump for its paid subscribers -- are growing even faster.
Wolfe Research analyst Zach Morrissey initiated coverage of the stock two weeks ago, but called it "priced for perfection" and went with a neutral peer perform rating. Those three words are a dinner bell for growth investors. There are things that are better than "perfection" when a company's appeal is exploding. There's a renewed interest in brushing up on foreign languages either for upcoming travel or to improve job search chances. Learning a new language as a hobby is also a timeless pursuit.
Revenue rose a better-than-expected 42% in its latest quarter, and that's with softness in the advertising market that it uses to monetize the 93% of its user base that isn't paying to subscriber to the service. Some of the market's biggest winners start by being tagged as "priced for perfection" by a Wall Street pro.
