2 Stocks Down 74% and 57.5% to Buy Right Now

In the stock market, it’s often true that winners tend to keep winning. Powerful sales and earnings momentum typically translates into strong returns for shareholders.

On the other hand, it’s also possible to score big wins by backing high-quality businesses that are being underestimated due to near-term headwinds that can be overcome with time.

With that in mind, read on to see why two Motley Fool contributors think that investing in these two industry-leading companies would be a smart move while they still trade at massive discounts.

A true bargain for risk-tolerant investors

Jennifer Saibil: The stock of Carnival (NYSE: CCL) doubled last year and is on the rise this year, but believe it or not, it’s still 74% below its previous high.That might be surprising because its business has rebounded and is surpassing pre-pandemic levels. Carnival is reporting record revenue, high demand, and improving profitability.

In the 2024 fiscal second quarter (ended May 31), revenue was a record $5.8 billion. Operating income was $560 million, up almost 400% from last year, and it posted a net profit of $92 million, or $0.07 per share.

Demand continues to be elevated, and there were record customer deposits and booking levels again. Trends of a longer booked-out curve at higher pricing continued, and the total booked position for the rest of 2024 is its best ever, while there are record bookings for 2025.

So what’s the catch? There are still quite a few metrics falling short of pre-pandemic performance, and that’s putting off investors.

Net income was positive in the quarter, but that’s still inconsistent. More pressing, though, is the debt. Carnival is paying off the massive debt it took on to stay running when it had no revenue, but it’s still at $29 billion.

It has $5.7 billion of maturities over the next three years, and it needs to bring in enough cash to pay those off. It had $2 billion in cash from operations in the second quarter and $1.3 billion in free cash flow, and if it can keep up those kinds of numbers, it should be OK.

But it has to keep it up for a long time to be…


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