Holiday season is officially here, and tourists are gearing up to get on planes, trains and cruise ships.
Cruise operator Carnival CCL, which is listed on London and New York, has been a beneficiary of this tourism boom.
Shares are up around 25% in a month and the trigger for this move was the company’s half-year earnings, which showed a 75% year-on-year increase in profits.
Passenger numbers have also risen, surging from 5.7 million to 6.3 million in the first half of 2025.
Among Morningstar-rated stocks, it was the best performer in Q2, behind Burberry and Deliveroo.
Narrow-moat Carnival has faced scrutiny in recent years over its heavy debt load, especially during the covid pandemic, a moment of existential crisis for the travel industry.
But investor concerns have been allayed by Carnival’s return to profitability and strategy to refinance high-interest debt with cheaper loans.
Are Carnival Shares a Buy, Sell or Hold?
Jaime M Katz, senior equity analyst at Morningstar, argues the company has greater long-term upside. She points to Carnival’s ability to reposition to higher-growth regions, such as Asia-Pacific.
She also says that cruise companies have managed to position themselves as “value” travel options in comparison with pricey flights and hotels.
While shares are yet to recover their pre-covid highs, shares are up nearly 100% over five years to July 2.
But the London-listed shares are still undervalued, according to Morningstar metrics: they’re trading just below £20 but have a fair value estimate of £24.10.
