Carnival Corp: A Cruise Ship of Value in a Sea of Uncertainty

Sarah Ketterer, the value investing ace behind Causeway Capital Management, has long been a contrarian’s contrarian. Her $4.78 billion portfolio is a masterclass in buying fear and selling complacency. And today, her largest bet—10.85% of her holdings in Carnival Corp (CCL)—is a bold signal: the cruise giant is a bellwether for the cyclical recovery. With 80% of 2025 bookings already sold and a management team turning the ship around, Carnival isn’t just surviving—it’s primed to thrive. Here’s why this is a buy now, and why the market’s pessimism is your gain.

The Case for Carnival: Cash, Catalysts, and Contrarian Courage

Ketterer’s stake in Carnival is no accident. The cruise line’s cash flow machine is the first pillar of its recovery. Despite macro headwinds like trade tensions and inflation, Carnival is generating “tons of cash,” as Ketterer put it, enabling it to slash debt and retain financial flexibility. reveals a trajectory from $400 million in 2021 to an estimated $2.1 billion in 2025—a 425% surge. This resilience is critical in a sector where cash is king.

Then there’s the demand tsunami. Carnival has already sold out 80% of 2025 bookings, a staggering figure that underscores the staying power of travel. Ketterer’s insight here is sharp: travel is among the last discretionary expenses consumers cut—even in recessions. This isn’t just a pandemic rebound; it’s a structural shift. Cruise lines, with their high margins and recurring revenue models, are leveraged to capitalize on this.

tells the tale: while Boeing’s stock has languished (-25% since 2020), Carnival’s has surged 350%. The divergence? Boeing bet on a world of fixed-wing dominance; Carnival’s management bet on liquidating costs, upgrading ships, and leaning into demand. Ketterer, who exited Boeing entirely last year, knows where value lies.

Why Now? The Turnaround Play and Ketterer’s Track Record

Ketterer’s thesis isn’t new—it’s a mirror of her success with Rolls-Royce Holdings, where she rode a 7x return after spotting a turnaround in an undervalued industrial. Like Rolls, Carnival’s management has executed a “self-help” agenda: pruning underperforming lines, digitizing operations, and slashing costs. The result? A debt-to-EBITDA ratio dropping from 5.5x in 2020 to an estimated 1.8x by year-end.

This isn’t just about balance sheets—it’s about pricing power. Cruise lines can hike fares in a tight labor market, and Carnival’s 2025 pricing is up 15% YoY. With a fortress balance sheet and sticky demand, this is a company positioned to grow profitably even in a slowdown.

Valuation: A Discounted Gem in a Priced-Out Market

Carnival’s stock trades at just 8.5x forward EBITDA, a historic discount to its 10-year average of 12.5x. Meanwhile, peers like Royal Caribbean (RCL) and Norwegian Cruise Line (NCLH) are valued at 10.2x and 9.8x, respectively. The gap? Market skepticism over macro risks. Ketterer’s contrarian eye sees this as a buying opportunity: a company with $5 billion in liquidity and $2.1 billion in free cash flow is far less vulnerable than headlines suggest.

The Macro Crossroads: Why Pessimism is Overdone

Critics will point to the Fed’s rate hikes and a potential recession. But Ketterer’s genius is in spotting asymmetric upside—situations where the downside is limited but the upside is vast. Carnival’s 80% booking rate creates a “moat” against volatility. Even if 20% of remaining bookings evaporate, Carnival’s cash flow is still intact. Meanwhile, a recovery in business travel or easing of trade tensions could supercharge margins.

The Bottom Line: Carnival is the Cruise Ship to Board

Sarah Ketterer’s portfolio is a treasure map, and Carnival is its X. With cash flowing, demand locked in, and a track record of execution, this is a company—and a stock—poised to outperform when the cycle turns. The market’s fear is your fuel.

Act now. The seas are calm for those brave enough to sail.

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Data sources: SEC filings, Causeway Capital Management interviews, Morningstar analysis.