Carnival (CCL -3.75%) (CUK -3.72%) has made a huge rebound in its business, and its stock is up more than 200% since bottoming out in 2020.

But if you think the shares have completely rebounded, you would be mistaken. Although it's taken quite a leap from rock bottom, it's still 64% off its all-time highs from before the pandemic.

The cruise company was a reliable market-beating stock before the pandemic upended its business, and it should get back to that status. Here are three reasons to add it to your portfolio.

1. Customers can't get enough

Carnival is the largest cruise operator in the world, and it continues to report record revenue and demand. Each quarterly report is like a broken record of all-time highs in revenue, bookings, and deposits.

What's even more compelling is that while most companies are able to update investors about backward-looking metrics (like how much money they made in the quarter, how much traffic increased, and so on), Carnival also gives forward-looking metrics like future bookings and deposits. So investors get a sense of what's going to happen over the next year or two.

In the 2024 fiscal fourth quarter (ended Nov. 30), revenue increased 10% year over year to reach $5.9 billion. It exceeded guidance all around for both the fourth quarter and the full year.

New guests and repeat guests were both up by double-digit percentages year over year in 2024, with new guests outpacing repeats. Aside from fares themselves, there's been an acceleration in on-board revenue over the past few years, both pre-cruise and during sailings.

As for the future, its cumulative booked position for 2025 is in its best-ever position for both price and occupancy, and demand exceeded last year despite lower remaining inventory. Bookings for 2026 also achieved a record in the fourth quarter.

Management is positioning itself to keep the demand strong, taking several measures to improve its fleet and itineraries. It launched three new ships last year, including the Sun Princess, voted best mega-ship in Condé Nast Traveler's Reader's Choice Awards.

The company is opening a new destination in the Caribbean called Celebration Key ("the ultimate beach day," as management refers to it), an exclusive enclave for Carnival cruise guests. It's also expanding RelaxAway, another exclusive destination. Introducing new ships, activities, and destinations should keep regulars coming back and turn first-timers into repeat guests.

2. It's back to profitability

As Carnival meets healthy demand and generates higher revenue, profits are finally following.

Net yields, which it uses as a baseline profitability metric, were 6.7% higher than the previous year in the fourth quarter. Net income was $303 million, up from a $48 million loss last year, and it was the third straight quarter with positive net income. The company reported a full-year profit of $1.9 billion, exceeding management's guidance.

It's expecting further improvements in 2024, with higher net yields and an outlook of $2.3 billion in net income. That should give investors confidence that management is operating efficiently, and that Carnival can return to its superior pre-pandemic performance.

3. It's still cheap

Even at its higher price, the stock trades at a one-year forward price-to-earnings ratio of less than 13. That's because the market sees risk here. But I would call this an opportunity, not a value trap.

The major risk for Carnival right now is its high debt. It still has a massive amount but has paid off some of the highest-interest notes. As operating cash and free cash flow increase, it's becoming more likely that it will be able to pay it back at a steady pace.

The company is $8 billion off its peak debt from 2023, and it has an undrawn credit capacity of $2.9 billion. It's also benefiting from lower interest rates, which will make it easier to repay even more. However, if demand slows down before it can turn a corner, it could be in trouble.

Considering Carnival's robust demand, leading position, investment in the future, and profitability, I think investors can feel confident about the cruise operator's ability to pay down the debt to manageable levels over the next five years or so. At this price, Carnival stock looks like a bargain.