Why Carnival Could Be the Ultimate Non-Tech Growth Stock

Key Points

• Exceptional consumer demand is fueling Carnival's record-breaking revenue and profitability, showcasing significant momentum in the expanding cruise market.
• Innovative guest experiences, including new exclusive destinations and fleet modernization, are strategically designed to drive Carnival's sustainable long-term growth.
• Carnival's strong earnings growth projections, coupled with its current valuation, suggest a potentially attractive opportunity for investors seeking non-tech alternatives.

While technological innovation often dominates market attention, a growing number of investors are seeking growth opportunities in less crowded sectors. The global leisure travel industry, currently in a strong recovery, offers such an alternative, with the cruise segment demonstrating significant strength.

Reports suggest passenger numbers are recovering and projected to surpass pre-pandemic levels, indicating continued consumer demand for cruise vacations through 2025.

Carnival Corporation & plc NYSE: CCL is a leading global cruise operator that stands out in this revitalized market.

Its recent performance and reported strategic direction present a strong argument for its consideration as a significant non-tech growth investment.

Carnival Posts Record Q1 2025 Results, Raises Full-Year Outlook

Carnival's recent financial reports demonstrate strong growth driven by exceptional consumer demand. In the first fiscal quarter of 2025 (ending Feb. 29, 2025), the company achieved record revenues of $5.8 billion, a $400 million increase year-over-year. Net yields rose by an impressive 7.3%, exceeding expectations. This surge in demand significantly boosted profitability, with operating income nearly doubling to $543 million. 

Adjusted net income reached $174 million ($0.13 per diluted share), a substantial improvement from the previous year's loss, and adjusted EBITDA hit a record first-quarter high of $1.2 billion, a 38% increase. Future demand also appears healthy, with customer deposits reaching a record $7.3 billion.

Management noted the extended booking curve at historically high prices, revealing that by the end of Q1 2025, the booked position for the remainder of the year matched the previous record but at better price points, and bookings for 2026 and beyond reached a new high.

Consequently, Carnival has raised its full-year 2025 guidance, projecting adjusted net income of around $2.49 billion ($1.83 per share) and adjusted EBITDA of nearly $6.7 billion, with net yield growth of about 4.7%.

Carnival Accelerates Growth Strategy

Carnival's rebound strategy involves implementing initiatives designed to drive sustainable, long-term growth and enhance profitability. A cornerstone of this strategy is the "SEA Change" program, which is focused on achieving specific financial targets.

The company now expects to meet its 2026 adjusted return on invested capital (ROIC) and adjusted EBITDA per available lower berth (ALBD)—a key financial metric in the cruise industry—a year ahead of schedule, in 2025, with a projected adjusted ROIC of about 12% for that year.

Achieving such targets ahead of schedule underscores accelerated operational efficiency and profitability improvements.

Innovation in guest experiences and new revenue streams is also pivotal. The highly anticipated exclusive destination, Celebration Key in Grand Bahama, is on track for its July 2025 opening. It is expected to be a significant draw, potentially boosting ticket revenue and onboard spending.

Alongside this flagship project, Carnival continues to invest in enhancing its other private destinations, such as RelaxAway, Half Moon Cay, and in modernizing its existing fleet through programs like AIDA Evolution, which involves upgrades to dining venues, suites, and fuel efficiency technologies.

Fleet and capacity management are being handled with a disciplined approach. While introducing new, more efficient ships like the Star Princess (scheduled for delivery in 2025), Carnival is also strategically retiring older, less efficient vessels.

This results in a modest and strategic overall capacity growth, projected at 0.8% for fiscal year 2025. 

In a high-demand environment, such controlled expansion is designed to support strong pricing power and optimize per-passenger revenue, directly contributing to the growth narrative.

Carnival Stock Shows Undervalued Growth Potential

Carnival's current stock valuation presents an interesting case for investors seeking growth outside the often-volatile tech sector. As of May 21, 2025, Carnival’s shares traded around $22.25, with a market capitalization of approximately $25.9 billion.

The stock’s trailing price-to-earnings ratio (P/E) stood at about 16.01. More indicative of a company on a growth trajectory, its forward P/E ratio, based on anticipated earnings for the next fiscal year, was approximately 12.93.

A particularly relevant metric for growth stocks is the price/earnings to growth (PEG) ratio, approximately 0.54 for Carnival. Investors often interpret a PEG ratio below 1.0 as a potential sign that a stock may be undervalued relative to its expected earnings growth rate. 

With earnings per share projected to grow substantially (around 18.08% for the next year), this PEG ratio suggests that the market may not have fully priced in Carnival's growth potential.

Carnival Emerges as a Leading Non-Tech Growth Play

Carnival Corporation's narrative is increasingly one of growth and strategic financial improvement. The potent combination of a vigorous rebound in cruising consumer demand and Carnival’s record-setting operational execution provides a strong foundation.

Strategic initiatives to boost long-term profitability and capital returns, new revenue drivers, and a disciplined approach to fleet modernization and capacity growth are set to fuel this expansion further. While the leisure travel industry's inherent risks remain pertinent, Carnival's current trajectory presents a compelling argument.

For investors seeking to diversify their portfolios with a company demonstrating clear expansionary momentum outside the often-crowded technology space, Carnival Corporation warrants serious consideration as a leading non-tech growth candidate.