With the S&P 500 index up 6% this year and hitting new highs, we’re back to a thriving bull market. Investors love to see their stocks fly, but the flip side of that is that it’s harder to find great deals. Consider that the average S&P 500 P/E ratio continues to balloon as the market rises.
If you’re worried about finding good deals in the market, that’s a valid concern. But it doesn’t mean they don’t exist. Consider Carnival (CCL -1.51%) (CUK -1.43%) and Williams-Sonoma (WSM -0.80%), which are trading at dirt cheap prices despite running excellent businesses and having a long growth runway.
1. Carnival: The global cruise leader
Carnival is the leading global cruise operator, a one-time market beater that’s fallen due to extreme debt. Its business is back to flourishing after a short pause early in the pandemic, but while it continues to break its own record quarter after quarter across metrics, Carnival stock is still 60% off its highs.
As it keeps reporting near-flawless performance and paying off its debt, the stock price is rising — up 64% over the past year. Yet, it trades at a price-to-sales ratio of 1.5 and a forward, one-year P/E ratio under 13, and it’s not too late to buy.
In its fiscal 2025’s second quarter (ended May 31), it beat internal guidance as well as Wall Street expectations to post new records. Revenue increased about 9% year over year to $6.3 billion, and operating income was up from $560 million last year to $934 million this year. Earnings per share increased from $0.07 last year to $0.42 this year.
Carnival had record deposits of $8.5 billion, and it’s maintaining its historically high bookings at high ticket prices; plus, it’s booked out for an increasingly long curve. There have been worries that demand will dry up before the company can get back to a reasonable debt level, but so far demand is remaining strong even as Carnival efficiently pays off its debt.
The cruise line ended the quarter with $27 billion in total debt, and it has refinanced $7 billion so far this year at more favorable rates. It has had two upgrades from credit ratings agencies that bring it one notch away from investment grade.
Carnival stock may not be the right choice for the most risk-averse investor, but if you can handle some risk, Carnival should bounce back and reward shareholders.
Image source: Getty Images.
2. Williams-Sonoma: The premium housewares giant
Williams-Sonoma owns several brands that target the upscale housewares shopper. Although its customer is generally more resilient than the mass consumer, it has struggled along with its industry as macroeconomic pressure persists. The real estate industry is still sluggish, and that has impacted all kinds of home improvement.
However, the situation is improving, and the company reported solid results for its most recent period, the fiscal 2025 first quarter (ended May 4). Comparable brand revenue, its preferred top-line metric, increased 3.4% year over year, and operating margin was 16.8%, exceeding guidance. The retailer is well fortified to handle changes in tariffs since it has a diversified supplier base, with only 23% coming from China, and it reiterated its full-year outlook after the first quarter.
Current performance demonstrates the company’s strength under pressure, which should boost investor confidence. But it’s the long-term outlook that makes the stock look like a buy for the future.
One of what it calls its key differentiators is “digital first, not digital only,” and that’s the way most retailers are succeeding today. Having been at it a long time, Williams-Sonoma has a robust omnichannel strategy, and e-commerce now accounts for a majority of total sales — 66% in the 2025 fiscal first quarter. It sees a $830 billion addressable market, especially as the industry moves online, where it already has an edge.
Williams-Sonoma stock is down 8% this year, but it’s already climbing back up on investor enthusiasm. Plus, it pays a dividend that yields 1.4% right now. At the current price, it trades at a forward, one-year P/E ratio of 19, and this could be a great entry point for investors on the fence.
Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Williams-Sonoma. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.
