2 Stocks That Could Make Big Moves Before the Year Ends

Two stocks that have been getting a lot of investor attention recently are Sirius XM Holdings (NASDAQ: SIRI) and Carnival (NYSE: CCL) . These stocks have underperformed the major market indexes this year, but they are notable brands that many investors recognize.

Both are showing improving trends that could lead to sharp rallies in their share prices. Let's take a look at the fundamental catalysts that could benefit shareholders of these companies, and what kind of return to expect if all goes well.

1. Sirius XM Holdings

Sirius XM is a very profitable business based on earning recurring revenue from millions of subscribers for its satellite radio service. It has agreements with major automakers that pre-install the service in their vehicles, and this advantage helped Sirius XM gain 33 million subscribers. It also owns Pandora, which has around 6 million subscribers.

The company experienced a slight uptick in cancellations over the last year, which has weighed on revenue growth and the stock. However, this appears to be a temporary blip; management attributes the increase in subscriber churn to a rise in vehicle sales, which created some variability between paid and unpaid plans. But executives expect improving subscriber trends in the second half of 2024.

Meanwhile, Sirius XM continues to grow its advertising revenue, which jumped 7% year over year in the first quarter, and this is starting to have an impact on profits. The company's net income increased by 14% year over year to $265 million in Q1.

Analysts expect Sirius XM to boost earnings per share by nearly 10% annually over the long term, which should justify a higher price-to-earnings (P/E) multiple.

The stock currently trades at a conservative forward P/E of 13 -- about half the market average. The share price could climb another 30% if the forward P/E moves back to the 17.4 multiple it had at the beginning of the year.

Of course, it's difficult to time the market, but assuming Sirius XM reports improving subscriber trends and continues to grow advertising revenue, the stock could move sharply higher by year-end.

2. Carnival

Carnival is the largest cruise operator in the world, which makes it a top stock to profit from growth in the travel industry. The company continued to report strong financial results in the first half of 2024, with higher revenue, operating profits, customer deposits, and booking trends compared to the start of 2023.

It's a good bet the stock will move higher over the next year. The company is working relentlessly to improve profitability and reduce the debt it took on during the pandemic. It expects to increase the capacity for its flagship Carnival Cruise Line -- one of its more profitable brands -- substantially by 2028. This will go a long way toward helping it reach its financial goals.

Meanwhile, demand trends are looking very favorable for more profitable growth heading into 2025. Management noted on the Q2 earnings call that pricing for bookings taken in the quarter is trending higher for the rest of the year.

Another positive indicator is that Carnival entered the second quarter with less inventory to sell, which allowed it to take bookings further out into 2025. Strong demand combined with flat capacity growth next year points to higher pricing, revenue, and profits.

Carnival stock has traded in a range over the last year, but it could be on the verge of hitting new highs. The shares sport a modest forward P/E of around 16. That's low enough for the stock to move higher as investors start looking to next year's earnings estimates.

Wall Street currently expects Carnival to report adjusted earnings of $1.18 this year before increasing 30% to $1.54 in 2025. Applying the current forward P/E to 2025 earnings estimates would put the share price at $24, implying upside of 33%.

Investors will usually start valuing stocks based on next year's estimates during the fourth quarter or early in the new year, so assuming Carnival stays on track with its positive outlook, shares could move higher as 2025 draws closer.

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