With less than a month left this year, we can say that 2024 has been great for the stock market. The S&P500 The index, often considered the benchmark for broader market performance, is up about 28% year to date. Meanwhile, the more growth-oriented ones Nasdaq Composite The index has seen its level increase by 31.5% over the period.
Nvidia, Palantir, Microsoftand other big winners may continue to climb higher and help set records for major indexes, but investors may also want to consider stocks that are still down sharply from previous valuation highs. With that in mind, read on to see why two Motley Fool contributors think buying these stocks now would be a smart move at the end of the year.
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Jennifer Saibil: Shares of Carnival (NYSE: CCL) have increased by 44% this year, after more than doubling last year. So investors might be surprised to learn that this top stock, which appears to have recovered, is still 63% below its all-time high.
The company itself is doing extremely well: sales have returned and are growing, and demand is at an unprecedented level. In the third fiscal quarter of 2024 (ended August 31), revenues increased year-over-year from $6.9 billion to $7.9 billion. Nearly half of the inventory for 2025 was already booked by the end of September and is also at the best booked position ever for 2026.
Profitability is still not at the level of the past: it was reliable and growing. Today it still returns. But as demand remains strong, profitability figures are healthy. Amended earnings before interest, taxes, depreciation and amortization (EBITDA) increased 25% year-over-year to $2.8 billion in the third quarter, and operating income improved $554 million year-over-year to $2.2 billion. Net income was positive in the quarter at $1.7 billion, although Carnival has not yet returned to consistently positive net income.
So what’s the problem? The main problem for investors is Carnival’s massive debt, which the company amassed when its cruises were no longer active. Although management is steadily paying this off, it is still high at $29 billion at the end of the third quarter. Carnival’s shares soared on news of a rate cut as it could pay down its debt faster.
Another concern is that demand will eventually slow and Carnival’s performance could look choppy before it stabilizes at normal levels. But investors should focus on the long term.
