Stocks on an Ascent with Promising Prospects for Long-term Investment
Carnival Corporation and Boeing: A Look at Their Near-Term and Long-Term Upside Potential
In the realm of travel and transportation, two giants – Carnival Corporation and Boeing – are making waves. Let's delve into the near-term and long-term upside potential for each of these companies.
Carnival Corporation
Carnival Corporation, a leading provider of affordable luxury travel, reported a record-breaking Q2 with an operating income of $934 million and revenue of $6.3 billion. The company's strong operational momentum is evident, with record booking deposits and increasing earnings estimates for fiscal 2025.
Analysts predict an average near-term upside of 8.5% to 10% for Carnival Corporation's stock over the next year, with a consensus "Buy" rating and an average price target around $31.47. The long-term upside for Carnival appears substantial, with some forecasts projecting the stock could reach $40 by the end of 2025 and $65 by 2026, marking approximately 100% gains over a few years.
Carnival Corporation, through its brands like Aida, Holland America, Costa, and its namesake brand, is well-positioned to capture a significant portion of the growing cruise market. With eight new cruise ships on order for delivery between now and 2032, the company is poised for continued growth.
However, it's important to note that Carnival Corporation is a leisure cruise outfit that took on significant debt during the COVID-19 pandemic. As of Q2, the company has $26 billion in long-term liabilities and is currently paying $340 million worth of quarterly interest on its loans.
Boeing
Boeing, a major aerospace manufacturer, reported an 18% year-over-year revenue improvement to $19.5 billion during the first quarter of 2023, and its order backlog grew to a record-breaking $545 billion.
Regarding Boeing's stock, more targeted analysis would be needed to assess upside potential accurately. Analysts expect the company's top line to continue growing at a double-digit pace, from $87 billion this year to $112 billion in 2027.
Despite its recent troubles, including design and manufacturing issues with its 737 MAX and 787 Dreamliner jets, and a fatal crash of a 787 in India, the majority of analysts rate Boeing's shares as a strong buy at this time due to the turnaround effort's progress. Boeing's stock is currently priced at around 15 times this year's expected earnings of $2 per share, making it relatively cheaper compared to other stocks.
Boeing predicts total deliveries of 43,600 new planes over the next 20 years due to the need to replace the current in-service aircraft, which have an average age of 15 years. This forecast suggests a promising future for Boeing, assuming the company can navigate its challenges effectively.
In summary, the near-term outlook for Carnival Corporation is cautiously optimistic, with an average analyst buy consensus, while long-term forecasts are strongly positive assuming continued travel demand recovery. For Boeing, more targeted analysis would be needed to assess upside potential accurately.
Investing in Carnival Corporation's stock could yield an average near-term upside of 8.5% to 10% over the next year, with a long-term upside potential of approximately 100% gains over a few years, as forecasted by some analysts. Finance analysts suggest that Boeing's stock is relatively cheaper compared to other stocks, with a current price around 15 times this year's expected earnings of $2 per share.
A significant portion of the growing cruise market is positioned to be captured by Carnival Corporation through its brands like Aida, Holland America, Costa, and its namesake brand, as the company is already planning to launch eight new cruise ships between now and 2032. Boeing's future also seems promising, with the company predicting total deliveries of 43,600 new planes over the next 20 years due to the need to replace the current in-service aircraft.
Both Carnival Corporation and Boeing have faced challenges lately, with Carnival Corporation accruing significant debt during the COVID-19 pandemic and Boeing dealing with ongoing design and manufacturing issues with its 737 MAX and 787 Dreamliner jets. However, the majority of analysts rate both companies as strong buy opportunities with encouraging long-term prospects.
