2 Potentially Explosive Stocks to Buy in March

The market has had a strong start in 2024. Keeping the rally going in the third month of this year won't be easy, but there are two stocks that I think can deliver serious upside in March.

Carnival Corp. (CCL -0.66%) reports quarterly results later this month. Disney (DIS -0.04%) is going to make sure that it generates positive headlines in March heading into a contested shareholder meeting in early April. They are both big brands with explosive potential to keep moving higher in March. Let's take a closer look.

1. Carnival

The seas are open again for the cruise line industry, and Carnival is coasting. The world's largest cruise ship operator is now shattering pre-pandemic records in most key metrics, a significant milestone given Carnival is in the travel segment that was hit the hardest by the COVID-19 crisis following prolonged shutdowns worldwide.

It's not just record revenue that Carnival posted when it delivered blowout financial results for the fiscal fourth quarter that ended on Nov. 30. The cruise line closed out fiscal 2023 with $6.4 billion in customer deposits for future sailings, 25% higher than it's ever been at the end of any fiscal year. Net per diems (the average net revenue per passenger for each cruise day) and net yields (revenue without the more variable expenses that include air transportation costs, travel agent commissions, and smaller direct costs) are also at high-water marks.

It's not just the top line that's riding the love boat. Despite four years of surging cost inflation, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is 500 basis points higher than it was in 2019 on a constant currency basis if you exclude fuel expenses.

Image source: Getty Images.

Carnival has yet to announce when it will discuss financial results for the fiscal first quarter that ended two weeks ago. It has historically happened in the last few days of March. If investors appreciated the fourth-quarter numbers they heard in late December, they're probably going to like what they get later this month.

Carnival's two largest rivals operate on calendar quarters, and both of them have delivered spectacular results and raised guidance in recent weeks. Carnival may have had record sums of reservations on its books at the end of last year, but the early reports on wave season -- the peak promotional period that runs from the holidays through March -- from its peers have been great.

Momentum is already strong for Carnival. It finally posted a quarterly profit for the first time since 2019 during its peak summer season last year, but the more interesting catalyst here is how analysts are asleep at the helm's wheel. Carnival isn't just beating expectations on the bottom line. The degree of the beat is intensifying with every passing quarter.

Data source: Yahoo! Finance. EPS = earnings per share.

Carnival shares more than doubled last year, but the stock is still cheap. The shares are trading for 16 times this year's projected earnings and 12 times next year's profit. You could've bought Carnival stock at the start of last year for less than 6 times what it's now expected to earn next year. As a bonus, Wall Street pros have been consistently aiming too low throughout Carnival's recovery. March could be pretty good for cruise line stocks in general -- and Carnival shareholders in particular.

2. Disney

Unlike Carnival, Disney investors can't be happy with their 2023 stock chart. The media giant has fallen short of the market averages for three consecutive years, but it's off to a strong start in 2024. Disney enters this new trading week up 22% this year, tripling the market's year-to-date return.

Disney isn't reporting quarterly results in March. Its next financial update will take place in May. However, it does have two different activist groups trying to wrestle away board seats at the April 3 annual shareholder meeting. Disney is throwing everything but the kitchen Swift at them. Yes, I said Swift, as in Taylor Swift. It's not a coincidence that Disney outbid rival services to secure streaming rights for the record-breaking Taylor Swift: The Eras Tour concert film, launching it on Disney+ this Thursday night.

It's also obviously deliberate that Disney announced a 50% dividend hike last month, more than five months before the semiannual distribution will be paid. There have been well-received announcements in recent weeks covering everything from the dismissal of a key executive at its disappointing studio division, as well as an earlier-than-anticipated opening for a new ride at Disney World. Disney should win this proxy battle, but it will likely keep the trickle of good news going through March ahead of the annual meeting. The House of Mouse has momentum. It's not going to squander it this month.