As investors grapple with macro uncertainty and a cloudy path on the Federal Reserve’s rate cuts, they will need to adopt a long-term mindset to pick the best names for their portfolios.
To make the right decisions, investors can track the recommendations of Wall Street experts, who carefully assess the financial performance of a company and its growth strategies before assigning their ratings.
Bearing that in mind, here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Domino’s Pizza
This week’s first pick is restaurant chain Domino’s Pizza (DPZ). The company recently reported a beat on earnings per share for the first quarter, driven by higher U.S. franchise royalties and fees, as well as improved gross margin within the supply chain.
Following the Q1 print, Deutsche Bank analyst Lauren Silberman reiterated a buy rating on DPZ stock and increased the price target to $580 from $555, citing increased visibility in the same-store sales growth outlook.
Silberman noted that U.S. same-store sales growth of 5.6% reflected broad-based momentum, with improved traffic experienced in carryout and delivery. She added that the traffic growth was driven by Domino’s revamped loyalty program, strong value proposition, operations and innovation.
The analyst also noted that DPZ is benefiting from increased contributions from Uber Eats, thanks to growing marketing efforts and awareness. Overall, the Q1 results reinforced Silberman’s positive view on DPZ, backed by the company’s initiatives to support an increase in same-store sales, accelerating unit growth with improving franchisee profitability and better margins.
“We believe a premium valuation is warranted, and given the improving fundamental story, we think DPZ offers a favorable risk/reward,” she said.
Silberman ranks No. 446 among more than 8,800 analysts tracked by TipRanks. Her ratings have been profitable 69% of the time, with each delivering an average return of 13.9%. (See Domino’s Technical Analysis on TipRanks)
Shake Shack
We move to burger chain Shake Shack (SHAK), which reported mixed first-quarter results earlier this month. Nonetheless, investors were pleased with the company’s commentary about improving business trends.
BTIG hosted an investor meeting with the company’s management following the Q1 results. The firm’s analyst Peter Saleh reiterated a buy rating on SHAK stock and increased the price target to $125 from $120 based on the key takeaways from the management meeting.
“We believe the combination of technology (kiosks), enhanced operating model (less labor), and greater marketing are adding up to a very powerful, and profitable combination,” said Saleh.
The analyst thinks that the company’s strategic initiatives will enhance same-store sales growth and drive meaningful restaurant margin expansion in the near and long term.
Saleh highlighted that management is witnessing a high-teens check growth in kiosk orders compared to traditional in-store orders, as consumers like the customization options available at the kiosks. The analyst sees more sales benefit from the kiosks going forward, in addition to the labor savings and efficiency.
Saleh ranks No. 353 among more than 8,800 analysts tracked by TipRanks. His ratings have been successful 61% of the time, with each delivering an average return of 12.1%. (See Shake Shack’s Ownership Structure on TipRanks)
Apple
Finally, we look at tech giant Apple (AAPL), which recently reported better-than-expected fiscal second-quarter results despite a decline in its revenue. The company cited tough comparisons with the prior-year quarter as the reason for the lower revenue.
Investors reacted positively to the results and the company’s announcement of an expanded buyback program. Apple’s board authorized an additional $100 billion worth of share repurchases.
Calling Apple’s fiscal Q2 results “solid,” Baird analyst William Power reaffirmed a buy rating on the stock with a price target of $200. The analyst noted that the company exceeded his estimates for revenue, earnings per share and gross margin.
Power added that Apple’s Services revenue grew 14.2% year over year, marking an acceleration from the 11.3% growth experienced in the fiscal first quarter. He also observed that Apple’s performance in China was better than feared. Greater China revenue declined 8.1%, reflecting an improvement from the 12.9% drop seen in the previous quarter.
The analyst thinks that the company’s AI update at its June developer conference could be a catalyst for the stock. Power explained that his price target for AAPL stock indicates a premium valuation compared to the peer group, “reflecting strong execution, growing services contribution, continued eco-system benefits and strong free cash flow.”
Power ranks No. 245 among more than 8,800 analysts tracked by TipRanks. His ratings have been profitable 56% of the time, with each delivering an average return of 16.1%. (See Apple Stock Buybacks on TipRanks)