Carnival (CCL -0.44%) (CUK) stock jumped 27% in May, according to data provided by S&P Global Market Intelligence. The stock is on the rebound after crashing earlier this year on fears of crackdowns on cruise industry taxes, and it got a boost from an analyst upgrade.

Not so smooth sailing

Carnival stock has been volatile since crashing when the pandemic started. The company has made incredible progress in rebuilding its business, with record demand every quarter that it keeps smashing through, but the market is still concerned about its massive outstanding debt.

The 2025 fiscal first quarter (ended Feb. 28) was another huge success. Revenue increased 7% year over year to $5.8 billion, and operating income nearly doubled to $543 million. The advanced booking position was in line with last year's record highs, and bookings for 2026 surpassed previous records. Total deposits were $7.3 billion, a first-quarter record, driven by both ticket sales and pre-cruise onboard sales, and ticket sales were at historical highs. Net yields, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and adjusted net income all exceeded management's guidance.

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Management is focused on driving demand and on cost efficiency. It launched a robust digital ad campaign that's yielding strong results, and it's getting the word out about what it calls its "game-changing asset," Celebration Key. This is an exclusive island resort devoted only to Carnival cruise guests. It's also ordering new ships to keep up with growing demand and generate further sales growth over the next few years.

The business is going well, but debt is still weighing on the balance sheet. Management made some major moves to reduce it in the first quarter, refinancing $5.5 billion of debt with lower-interest notes. It expects $145 million in annualized interest expense savings, and it reduced the total debt by another $500 million. However, Carnival's total debt stands at $27 billion as of the end of the first quarter, well above its historical levels.

Time to buy?

Carnival stock headed lower in February after Commerce Secretary Howard Lutnick said the Trump administration would get tougher on cruise companies that don't pay taxes. But as the price tumbled, it started to look very attractive to bargain hunters. Even now, Carnival stock trades at just 11 times forward one-year earnings. It also got a boost when an HSBC analyst raised it from a reduce rating to a hold rating.

Carnival stock may not be for the most risk-averse investor, but it could be an excellent buy right now for investors who can handle a bit of risk.