Up 30% year to date, Carnival (NYSE: CCL) is one of many battered stocks benefitting from a resurgence in 2023. But will it last? While there are some bullish signs for the cruise industry, Carnival's weak operating cash flow and overleveraged balance sheet could stop the rally. 

Carnival wasn't the only company to start the new year on good footing. In fact, the Nasdaq Composite index (which currently holds many of the market's most beaten-down tech stocks) rose by 6.4% on average. Investors are optimistic that lower inflation will encourage the Federal Reserve to slow its interest rate hikes without tipping the economy into a severe recession. Carnival is also enjoying company-specific tailwinds. 

In the fourth quarter of 2022, Carnival and its peers relaxed most of their remaining COVID-19 restrictions, no longer requiring proof of vaccine or testing for trips of 15 nights or less. The move brings the cruise industry in line with land-based vacation alternatives like hotels, amusement parks, and resorts. And the changes will help Carnival close the gap with its pre-pandemic 2019 performance. 

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Source Fool.com