The S&P 500 index continues to bounce back from its drawdowns to reach new highs. Now that the benchmark is in record territory once again, investors are trying to figure out where to find bargains in what they might consider an expensive market environment.
There's one growth stock, which trades 62% below its record (as of April 21), that looks extremely compelling today. Here's why buying the dip right now could be the best financial decision of 2026.
Image source: The Motley Fool.
This cruise company continues to operate from a position of strength
Despite ongoing geopolitical turmoil, Carnival (CCL 2.42%) continues to sail in smooth waters. For its fiscal 2026 first quarter (ended Feb. 28), the business once again reported upbeat financial metrics.
Carnival's revenue of $6.2 billion, which was a record, increased 6.1% year over year. And the company's $8 billion in customer deposits, a first-quarter record, indicates robust demand for cruise travel.
"We delivered an incredibly strong start to the year, achieving our highest level of bookings ever on strong demand that extended well into 2028 sailings," CEO Josh Weinstein said in the company's Q1 2026 earnings release.
Profits are also worth highlighting. Carnival's adjusted earnings per share (EPS) jumped 50% from the first quarter of fiscal 2025 to Q1 2026. This impressive bottom-line performance happened at the same time that fuel prices increased.
The leadership team also revealed the company's "PROPEL" long-term outlook. Investors have plenty to be excited about.
The forecast calls for more than 50% growth in earnings per share between fiscal 2025 and fiscal 2029. Carnival plans to return $14 billion in capital to shareholders in the form of dividends and buybacks. The business will remain focused on paying down debt, with the goal of getting net debt from 3.4 times now to 2.75 times adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
NYSE: CCL
Key Data Points
Upside potential comes from shares trading at a cheap valuation
In the past three years, this travel stock has skyrocketed 193%. After such an excellent performance, investors will be surprised to learn that shares still appear to be undervalued right now. This can introduce potential upside to returns.
The stock trades at a price-to-earnings ratio of 12.2. Compared to the S&P 500's multiple of 25.4, Carnival presents investors with a significant discount. That's an attractive proposition when you think about the momentum this business has.
There are risks to be mindful of, though. I think the most obvious is Carnival's balance sheet, which carries $25.3 billion in long-term debt. As mentioned, executives plan to keep paying this down. But it is an anchor, with a sizable $291 million in Q1 interest payments, that pressures the company's profitability. There's a lingering worry about what issues a possible recession can bring.
Even accepting this risk factor, Carnival's cheap valuation makes this a great buy-the-dip candidate in 2026.
