2 Soaring Stocks With More Upside Potential to Buy and Hold

Key Points

• Leisure cruise giant Carnival may be sitting on a massive amount of debt, but it's handling it well.

• Boeing's recent struggles are well-documented; just don't lose sight of the bigger picture.

• 10 stocks we like better than Boeing ›

Most investors will agree that a good stock is an even better buy after a price pullback. Still, just because the right stock is in the midst of a rally doesn't inherently make it not a buy. There are plenty of tickers that can keep on chugging higher after a major run-up.

Here's a closer look at a couple of stocks that may be soaring right now, but arguably still have plenty of near-term and long-term upside left to tap into from here.

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Carnival

If you know anything at all about the company then you know leisure cruise outfit Carnival (NYSE: CCL) took on a ton of debt during the COVID-19 pandemic just to survive that tough period. At its peak, it was sitting on nearly $33 billion worth of long-term liabilities, in fact, versus a pre-pandemic figure of less than $10 billion.

Although the company's since pared its debt load back to just under $26 billion, there's no denying that the $340 million worth of quarterly interest payments these loans are currently costing the company have weighed on Carnival's stock for a long, long time even well after the wind-down of the coronavirus contagion.

There's a reason, however, shares of this maritime cruise name are up by more than 330% from their 2022 bear market low, and knocking on the door of a new multi-year high. That is, demand for leisure cruising has never been stronger, and Carnival is fully capitalizing on it.

Its second-quarter results alone speak volumes on the matter. The company's operating income reached a record-breaking $934 million on also-record-breaking revenue of $6.3 billion. And that's despite higher ticket prices against a backdrop of what was supposed to be a tepid economy. These results follow a similarly strong Q1, and, for that matter, progress made over the course of the past couple of years.

CCL Revenue (TTM) data by YCharts

More of the same is in the cards, too. As of the end of Q2, total customer deposits toward future cruises (which have yet to be booked as revenue) also hit an all-time high of $8.5 billion, fueling analysts' expectations for continued single-digit revenue growth through 2027 that should in turn produce per-share profit growth in the mid-teens.

Carnival's only headwind right now is a lack of boats, although they're coming, too. It's got eight new cruise ships on order to add to its existing fleet of more than 90, all slated for delivery between now and 2032. What gives? As it turns out, consumers are increasingly falling in love with affordable luxury travel to touristy destinations. Carnival offers all three.

Numbers from Cruzely and Cruise Market Watch put things in perspective, suggesting that a nice, mostly inclusive cruise only costs between $150 and $250 per person per day. That's relatively cheap compared to other ways to vacation. Plus, the industry caters to a crowd that increasingly just wants to relax and not worry about details like figuring out where to eat, arranging transportation, etc. It's all handled by the cruise company, onboard.

That's why the Cruise Lines International Association believes total worldwide passenger volume is on pace to grow from last year's 34.6 million to 41.9 million per year by 2028. Carnival's range of price points through its different cruise brands like Aida, Holland America, Costa, and of course its namesake brand positions it to capture at least its fair share of this growth.

The kicker: Despite the recent bullishness, Carnival shares are still only priced at around 15 times this year's expected earnings of $2 per share. That's a heck of a lot cheaper than most other stocks right now.

Boeing

There's no denying Boeing (NYSE: BA) has suffered more than its fair share of trouble of late. Some of it is self-induced, like design and manufacturing missteps with its newest and highly touted 737 MAX and 787 Dreamliner jets.

Other aspects of its recent woes, however, aren't of its own doing. For instance, the recent fatal crash of a 787 in India appears to stem from pilot error rather than a fault with the aircraft itself. The world is simply more sensitive to such catastrophes involving a Boeing plane, knowing that the company has made some mistakes in the recent past.

Just don't lose sight of the (much) bigger picture. The fact is, the planet is going to need a lot more airplanes in the near and distant future, and it's going to need Boeing to make a bunch of them. The company's own outlook for the industry puts the matter in the proper perspective. In its most recent report on the air travel industry's likely future, Boeing suggests that the current global count of a little over 27,000 commercial aircraft will swell to 49,640 by 2044.

That doesn't mean airlines will only need to collectively purchase more than 22,000 new planes in the meantime though. With the International Air Transport Association reporting the average age of a commercial jet now stands at 15 years, most of the current in-service aircraft will need to be replaced by then. Boeing predicts total deliveries of 43,600 new planes over the course of the coming 20 years.

In this vein, Boeing's revenue improved 18% year over year to $19.5 billion during the first quarter of this year, while its order backlog grew to a record-breaking $545 billion; clearly, airlines are still buying its aircraft despite Boeing's recently dented reputation.

Analysts also expect the company's top line to continue growing at a double-digit pace at least for a couple of more years, from $87 billion this year to $112 billion in 2027, pushing Boeing out of the red and back into the black. The majority of these analysts also rate its shares as a strong buy at this time due to the turnaround effort's progress.

The stock is currently reflecting all of this tailwind, by the way -- the shares are up nearly 70% just since their April low. The stock is still below its multi-year highs, however, and stands at roughly half of its 2019 peak. Connect the dots. There's room and reason for more upside.

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