On Sept. 24, Carnival (NYSE:CCL) reported that voyages for its fiscal third quarter turned free cash flow (FCF) positive. Of course, this does not mean that the company is profitable yet. But Carnival is now clearly on track. As a result, things look very bright for CCL stock moving forward.

So far this year, the stock has been slowly recuperating. For example, CCL ended last year at $21.66. But as of the close of Sept. 30, it was at $25.01. That represents a gain of 15.5%.

However, during the year, CCL peaked at $31.31 on Jun. 2 and also reached a trough of $19.72 on Jul. 19. So, from the bottom, CCL stock is already up 26.8%. And I believe that it has much further to rise.

CCL Stock: Where Things Stand

The underlying business of this company is now healthy from an FCF standpoint. That is good for CCL stock. Nevertheless, Carnival still reported an adjusted net income loss of almost $2 billion. This was actually worse than last year’s adjusted net income loss of $1.7 billion.

However, going forward, Carnival has painted a much brighter picture. The company said that its booked position for the second half of 2022 is “at a new historical high.” Additionally, it said that all its ships are “planned to be in operation, despite reduced marketing spending.”

Moreover, according to Reuters, the company told investors that its cruise bookings for the second half of 2022 were ahead of pre-pandemic levels. Reuters noted that this was a “sign the cruise operator expects a rebound in business as it restarts voyages globally.”

According to the article, eight of the company’s nine brands have started sailing again. By the end of October, Carnival expects over 50% of its total fleet capacity to be available to guests.

This should lead to substantially higher revenue and positive profits. For example, analysts expect revenue to hit $2.56 billion this fiscal year ending Nov. 30, down from $5.59 billion last year. However, next year analysts forecast that revenue will reach $17.32 billion. That’s a massive upswing.

What Carnival Is Worth

Carnival now claims it has $7.8 billion in liquidity, which it believes is “sufficient to return to full cruise operations.” As a result, we can value the stock on a forward-looking basis.

For example, analysts now estimate that by 2022, earnings per share (EPS) will hit 3 cents and that, by 2023, EPS will jump to $2.01. So, at $25.01 as of Sept. 30, CCL stock is trading on a forward price-to-earnings (P/E) multiple of just 12.4 times EPS.

Investors have another chance to buy in at a cheap price here. This is because the market always discounts ahead at least nine months to a year. So, by mid-2022, the market will start to value CCL stock based on 2023 forecast earnings.

For example, Morningstar shows that the average P/E ratio between 2015 and 2019 was 15.89 times. Applying that to the forecast of $2.01 EPS for 2023, CCL stock will eventually trade at $31.94 per share. That represents a potential gain of 27.7% over the recent price of $25.01.

What to Do with CCL Stock

Wall Street analysts are also fairly positive on CCL stock. For example, Tipranks reports that nine analysts who have written on the stock in the last three months give it an average price target of $26.92 per share. That represents 7.6% upside.

Moreover, 18 analysts surveyed by Seeking Alpha now estimate an average price target of $28.59, or a gain of 14.3% over the Sept. 30 close price. That is relatively close to my price target of around $32.

Therefore, CCL stock is at a good entry point for investors right now, especially given the company’s ebullient outlook. My price target is $32 per share, based on a P/E multiple of 15.9 times 2023 forecast earnings. And this could become a higher target if the market eventually gives CCL a higher P/E ratio.

As I see it, investors could make a potential gain of roughly 28% going forward. That is a pretty good return on investment (ROI) for most long-term investors.

On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.