Carnival (CCL +3.39%) and Coupang (CPNG +2.56%) may not seem out of favor, but zoom out. Both of these one-time highfliers are now trading more than 70% below their all-time highs.
If you have $1,000 to invest, you may want to consider one of these stocks. They're on sale right now, at least compared to their historical peaks. Let's take a closer look so you can decide if you want to go shopping.
NYSE: CCL
Key Data Points
1. Carnival
The cruise line industry's recovery is complete. Carnival posted encouraging financial results this week. Revenue rose 22% to $5.4 billion for the fiscal first quarter that ended on Feb. 29. The world's largest cruise line operator posted an operating profit, reversing an operating deficit from the prior year. Interest expense would turn the profit into a loss on the bottom line, but the red ink was less than what it was targeting three months earlier.
Analysts also figured that Carnival's profit would be worse than what it ultimately reported. This isn't a surprise anymore. Carnival has been consistently exceeding bottom-line expectations lately, and the last three quarters have put up double-digit percentage beats.
| Quarter | EPS Estimate | Actual | Surprise |
|---|---|---|---|
| Q4 2022 | ($0.87) | ($0.85) | 2% |
| Q1 2023 | ($0.60) | ($0.55) | 8% |
| Q2 2023 | ($0.34) | ($0.31) | 9% |
| Q3 2023 | $0.75 | $0.86 | 15% |
| Q4 2023 | ($0.13) | ($0.07) | 46% |
| Q1 2024 | ($0.18) | ($0.14) | 22% |
Data source: Yahoo! Finance. EPS = earnings per share.
Carnival is posting record revenue results, and the future is even more exciting. Demand and what folks are willing to pay for a bon voyage have never been stronger. Its booked position for the final three quarters of fiscal 2024 is its best on record, with pricing and occupancy well ahead of where they were last year at this point.
Net yields -- an industry metric that basically tracks revenue per available passenger cruise day without the more variable expenses including air transportation and travel agent commissions -- is expected to approach 10% this fiscal year. Carnival and its rivals have overcome the prolonged pandemic-related shutdown, but the shares have not.
Image source: Getty Images.
Carnival stock has more than doubled since the start of last year, but it's still trading 76% below the all-time high it reached in early 2018. Yes, cruise line operators had to do some pretty desperate things to stay afloat when they were largely unable to take on passengers for more than a year in the wake of the COVID-19 crisis. Carnival bloated its share count and its debt levels. However, the company is now turning the corner on profitability.
It expects to generate an adjusted profit of $1.28 billion, or $0.98 a share, pricing the stock at a reasonable 17.5 times forward earnings. Carnival now has the means to pay down its debt or repurchase shares without sacrificing growing its fleet. The future is bright for cruise line stocks, and Carnival is leading the way.
NYSE: CPNG
Key Data Points
2. Coupang
Let's sail all the way to South Korea for our next stock on sale. Coupang is that country's e-commerce leader, and it isn't even close. With more than 100 distribution centers promising overnight delivery for orders placed before midnight, Coupang is within a 10-minute drive of 70% of South Korea's shoppers.
Its latest report featured an encouraging trend. After a steady run of decelerating revenue growth since going public at $35 three years ago, revenue has now accelerated for four consecutive quarters.
| Period | Revenue Growth (YOY) |
|---|---|
| Q1 2021 | 74% |
| Q2 2021 | 71% |
| Q3 2021 | 48% |
| Q4 2021 | 34% |
| Q1 2022 | 22% |
| Q2 2022 | 12% |
| Q3 2023 | 10% |
| Q4 2023 | 5% |
| Q1 2024 | 13% |
| Q2 2024 | 16% |
| Q3 2024 | 21% |
| Q4 2024 | 23% |
Data source: Coupang. YOY = year over year.
Investors should be all over Coupang, but it continues to be a broken IPO. The stock is currently trading 74% below the $69 price point it hit when it peaked on its first day of trading in early 2021. Coupang was growing faster when it made its public debut, but it was oozing a lot of red ink at the time. It's profitable now, armed with a cash-rich balance sheet to expand outside of its home turf and even make strategic acquisitions.
Coupang shares may not be cheap at just under 30 times next year's projected earnings. Being an undisputed leader in an emerging industry in a country whose economy is on the rise deserves a premium. With momentum back on its side, the e-commerce company is on sale.
