The stock market sell-off in March saw a large amount of value wiped off FTSE 100 constituents. Over the subsequent months, some firms have seen a rebound in performance and share price growth. For the cruise liner operator Carnival (LSE:CCL), this hasn’t been the case. From having a share price trading comfortably above 3,000p at the start of the year, it now sits just above 1,000p. You don’t have to be a great mathematician to see that the share price has fallen by two-thirds during this period. But do you need to be a great investor to spot that this could be an opportunity to make a large profit and become an ISA millionaire?
ISA millionaire status
Granted, you do need to invest a sizeable initial amount to make ISA millionaire status realistic. I’m not going to claim you can invest £1,000 into Carnival today and come out in two years time with a million. But two elements here can help to boost returns. First, the underlying investment. I’ll speak more on my outlook below, but if we work on the assumption that the Carnival share price returns back to 3,000p, it represents the current share price tripling. That certainly helps to grow whatever sized investment you start off with.
Second, achieving ISA millionaire status is helped by using a Stocks and Shares ISA in the first place. The ISA tool is a tax wrapper that allows investors to shield any profits from capital gains tax. This aids the process of trying to become an ISA millionaire because you get to keep more of your gains. Should the Carnival share price really take off, the percentage saved from tax would be substantial.
The outlook for Carnival
There’s growing optimism around the return of cruise operations for Carnival recently. This week, brand ambassador John Heald said the firm was hopeful of a return in November or even sooner. Six cruises are currently available for booking for a November departure. Aside from the US, the Italian subsidiary (Costa Cruises) has also released itineraries for the coming months.
I understand that demand may be weak initially, but the fact that cruises are back and business is resuming to some normality is very positive news. The company is saddled with a large amount of debt, and so getting revenue in the tin is key at this point. It’s estimated that the firm has borrowed almost $7bn since the pandemic hit earlier this year. The cost of maintaining such debt is expensive, so the sooner the firm can pay this down to a reasonable level the better.
From my point of view, I think Carnival has survived the pandemic by a whisker. Now that cruises are getting ready to head out again, I think that the firm will be able to survive. It won’t be an easy ride due to the debt levels, but I’d buy the stock for a long-term share price increase. Adding it to my ISA gives me an even better shot at becoming an ISA millionaire.
