1 Incredible Reason to Buy Carnival Stock Before Sept. 29

Key Points

• Carnival has been a rare turnaround story as it continues to enjoy strong demand.

• It has been prepaying and refinancing debt to save money.

• It should benefit from lower interest rates.

• 10 stocks we like better than Carnival Corp. ›

Carnival Corp. (NYSE: CCL) (NYSE: CUK) stock has proven the naysayers wrong from a few years ago and has bounced back in a big way from 2022 lows. It's up roughly 216% over the past three years and has become a rare turnaround story. However, it's still 57% off its all-time highs set back in 2018 as it continues to repay its standing debt of $27 billion.

Big news is expected at the end of the month that could help it get even closer to its previous highs. You might want to take a closer look beforehand to see if it's worth buying the dip.

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Image source: Carnival.

Lower interest rates, lower debt, higher stock gains

Carnival stock continues to rise as interest rates go lower. That's simply because the main reason for investors to be hesitant about it today is the high debt and the worry that the current robust demand for its services could slow down before it gets that debt to a point where it would be considered manageable.

So far, Carnival has been paying it down at a healthy pace and refinancing the remainder at better rates. In the 2025 fiscal second quarter (ended May 31), it prepaid $350 million of its highest-rate 2026 notes and refinanced the remainder at much better rates. It has also refinanced $7 billion at better rates year to date, saving millions in interest expense that can now be used for other purposes.

Carnival will release its fiscal third-quarter earnings on Sept. 29. Investors following the stock will want to see that more debt has been extinguished and that further refinancing was undertaken based on the Federal Reserve cutting interest rates again this month.

Carnival's stock price did not move much following the Fed's latest rate cut news. Investors are likely waiting to hear what management has to say next week. There's no guarantee, but the stock is likely to jump on positive news.

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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.