Carnival Corp (CCL) stock has risen over the last month since bottoming out in mid-April. Investors who short out-of-the-money (OTM) puts expiring in one month can make 3.0%+ yields at strike prices 5% lower than today's price.

CCL is at $23.97 in midday trading on Tuesday, June 3. This is up from April lows but still off its near-term peak of $28.49 on Jan. 30. It could be worth over $28 per share, as I will show in this article.

My previous price target was $25.52 using a free cash flow analysis. This was in a May 11 Barchart article, “Carnival Corp's Free Cash Flow Could Surprise Analysts - Is CCL a Buy Here?”

Updated Price Target

My last article on CCL forecasted free cash flow (FCF) of $1.743 billion for 2025 using a 6.7% average FCF margin on projected sales of $26.08 billion. 

• It probably now makes sense to look at the company's next 12 months (NTM) revenue and FCF forecasts. For example, analysts now project $27.07 billion in sales for 2026. So, on average its NTM sales run rate is $26.575 billion.

That means we can project a higher FCF run-rate:

  $26.575 b NTM sales x 6.7% FCF margin = $1.78 billion FCF

As a result, using the same FCF yield metric in my last article (4.65% - which is the same as multiplying FCF by 21.5x), its market cap could eventually be worth over $38 billion:

  $1.78b/0.0465 = $38.28 billion

That is +18% higher than today's market cap of $32.456 billion, as measured by Yahoo! Finance. In other words, CCL stock is worth 18% more:

  $23.97 x 1.18 = $28.28 per share

Analysts also agree. For example, Yahoo! Finance shows an average price target of $27.77 from 30 analysts (higher than a month ago, as seen in my prior article), and Barchart's mean is $27.96 per share.

Similarly, AnaChart's survey of 20 analysts now has an average of $29.74, up from $26.51 a month ago.

The bottom line is that CCL stock looks cheap here, both from a FCF target price standpoint and using sell-side analysts' price targets.

One way to play this, as I wrote last time, is to sell short out-of-the-money (OTM) puts in nearby expiry periods.

Shorting OTM Puts

For example, the July 3, 2025, expiry period (30 days from now), shows that the $23.00 strike price put option has an $0.85 midpoint premium. That provides a short-seller an immediate yield of 3.69% put yield.

In addition, the $22.50 put option has a 65-cent midpoint premium, provides an immediate yield of 2.89% (i.e., $0.65/$22.50).

So, on average, an investor could make over 3% through a combination of both of these OTM short-put plays.

The bottom line is that CCL looks cheap here.  Investors can set a lower buy-in price by shorting out-of-the-money (OTM) puts in one-month out expiry periods.