After the financial report was released, fundamental factors became more critical. Wall Street is optimistic about stocks such as Apple

Amidst the increasing uncertainty in the global macroeconomy and the increasingly unclear prospect of the Fed rate cut, investors are increasingly in need of adopting a stock mindset rooted in fundamentals to select the best stocks with solid balance sheets for their investment portfolios. This year, the market's widespread expectation for a Fed rate cut has significantly cooled from the expectation of six rate cuts totaling 150 basis points in January to the current expectation of only one rate cut of 25 basis points.

To make the right decisions, investors can appropriately listen to the consensus recommendations of Wall Street analysts. These stock market experts often carefully evaluate a listed company's financial fundamentals and performance growth strategies before giving ratings and target prices.

As the U.S. earnings season nears its end, as of the latest statistics, 459 S&P 500 index component companies have released their first-quarter earnings reports. Based on the currently released reports, the overall earnings per share growth rate of S&P 500 index companies in the first quarter is expected to reach 7.1%, far exceeding the analysts' general prediction of 3.5% before the start of the earnings season.

Data compiled by institutions shows that in the S&P 500 index, as many as 79% of index component companies exceeded profit expectations in the first quarter, compared to 76% in the previous quarter. Due to the better-than-expected performance of most component companies in their earnings reports, Wall Street has significantly raised the general expectations for earnings per share in the second quarter (ending in June).

At the end of the U.S. earnings season, companies that release relatively optimistic performance data or outlooks after their earnings reports are generally favored by Wall Street analysts, who often choose to raise stock ratings or target prices, leading to a period of upward movement in their stock prices. According to TipRanks' summary of recent research reports released by Wall Street analysts, Domino's Pizza (DPZ.US), Shake Shack (SHAK.US), and Apple Inc. (AAPL.US), these three U.S. listed companies have seen their stock prices rise significantly after announcing their earnings, with analysts unanimously bullish on their upside potential.

Domino's Pizza

TipRanks' recent top pick is the chain restaurant Domino's Pizza. The company's recently announced first-quarter earnings far exceeded market expectations, mainly due to the increase in U.S. franchise royalties and other fees, as well as the improvement in supply chain gross margins.

Deutsche Bank analyst Lauren Silberman reiterated a "Buy" rating on Domino's Pizza stock and significantly raised the target price from $555 to $580 (closing at $518.65 on Friday), citing increased visibility in the outlook for same-store sales growth.

Silberman pointed out that the 5.6% growth in U.S. same-store sales reflects broad growth momentum, with improvements in delivery and traffic. She added that the growth in traffic is driven by Domino's continuous improvement in loyalty programs, strong value proposition, operations, and innovationThe analyst also pointed out that due to increasing marketing efforts and brand awareness, Domino's Pizza is benefiting from the growing contribution of Uber Eats. Overall, the first-quarter performance has solidified Silberman's positive view on the fundamentals of Domino's Pizza, thanks to initiatives supporting growth in same-store sales and measures to accelerate unit growth by improving the profitability and profit margins of franchisees.

"We believe the premium valuation is justified, given the improvement in fundamentals, and we believe Domino's Pizza offers a favorable risk/reward." The analyst stated.

Shake Shack

The globally popular hamburger chain newcomer Shake Shack announced a mixed bag of first-quarter results earlier this month. Nonetheless, investors and analysts are satisfied with the company's comments on business trends improvement and performance expectations.

Following the announcement of first-quarter results, renowned investment firm BTIG held an investor conference with the company's management. Analyst Peter Saleh from the firm reiterated a "buy" rating on Shake Shack's stock and raised the target price from $120 to $125 based on the key points of the management meeting (closing at $103.280 as of Friday).

Saleh stated: "We believe that technology (self-service kiosks), improved operating models (less labor), and larger-scale marketing combined will form a very strong, very profitable product mix."

The analyst believes that the company's strategic initiatives will drive the pace of growth in same-store sales and promote meaningful restaurant profit margin expansion trends in the near and long term.

Saleh emphasized that management is witnessing double-digit growth in self-service order volumes compared to traditional in-store orders, as consumers prefer the customized options provided by self-service kiosks. The analyst believes that besides saving labor and improving efficiency, convenient self-service will also bring greater sales volume gains on a larger scale.

Apple

Global consumer electronics leader Apple received unanimous bullish views from Wall Street analysts after announcing its performance. The company's recently released second-quarter performance data exceeded expectations, and although revenue declined, the substantial free cash flow is still sufficient to support Apple's strong DCF valuation system. The company emphasized that the reason for the overall revenue decline in the quarter was challenging compared to the base period of the previous year. In addition, Apple CEO Cook stated at the performance meeting that Apple does believe that it will gain an absolute advantage in the field (AI field) due to privacy features, better integration, and powerful internal design chips.

Currently, leading smartphone hardware manufacturers are developing their own large models and are embedding offline edge large models into new generation models to create the so-called "AI large model smartphones." Compared to general AI large models that call cloud computing power, local large models on the edge can allow smartphone users, as well as iPad users, to use products like ChatGPT more efficiently, conveniently, and securely, and with the help of edge AI, they are expected to achieve a more personalized "private AI assistant" that better meets individual needsRegarding Apple's grand plan in the field of AI, analyst Dan Ives from the top Wall Street investment firm Wedbush predicts that in terms of its artificial intelligence development opportunities, Apple's over 2 billion system installation user base presents the "best" opportunity in the world. Ives believes that the upcoming global WWDC in June will be a "key moment" for the company's AI ambitions.

"When it comes to artificial intelligence, they won't just be observing from the outside. This is one of the largest installed base in the world, and it is a key moment for Apple to announce its artificial intelligence strategy," Ives said. Wedbush reiterated its $250 price target for Apple (as of Friday's closing, Apple closed at $183.050) and an "outperform" rating.

Investors have reacted very positively to Apple's better-than-expected performance and the announcement of an expanded stock buyback plan by the company. The most significant news is undoubtedly the announcement of the largest stock buyback in U.S. stock market history: $110 billion, surpassing the previous record of $100 billion set in 2018.

Incredibly strong fundamentals—high free cash flow and a solid balance sheet—are the most core factors that make large tech companies like Apple widely popular among Wall Street and global investors. According to Wall Street analysts' expectations, the top six U.S. tech giants by market value are expected to generate over $416 billion in free cash flow this year.

Analyst William Power from investment firm Baird stated that Apple's second-quarter performance was very robust, reiterating a buy rating on the stock with a target price of $200. The analyst pointed out that the company's revenue, earnings per share, and gross margin all exceeded the institution's expectations, showing that Apple's sales are not as pessimistic as Wall Street had anticipated.

Power emphasized that Apple's services revenue scale grew by 14.2% year-on-year, accelerating from the previous quarter's 11.3% growth rate. He also noted that Apple's performance in China is much better than feared. Performance data shows that Apple's total revenue in Greater China decreased by 8.1%, an improvement from the 12.9% decline in the previous quarter.

Wall Street analysts generally believe that the comprehensive update of artificial intelligence technology that Apple may release at the June Developer Conference (WWDC) could be a significant catalyst for the stock. One Wall Street giant, Morgan Stanley, recently forecasted that this year's June Apple WWDC will be the market's focus, with the highlight possibly being Apple's potential launch of new smartphones embedded with large AI models, as well as the iPad and Mac series products. Morgan Stanley recently raised Apple's target price from $210 to $216 and maintained an "overweight" ratingAnalyst Power explained that his target price for Apple's stock indicates that compared to peers, Apple's stock is more highly valued, emphasizing that the optimistic expectations for Apple "reflect stronger execution, continuously growing service revenue contribution, sustained ecosystem benefits, and robust free cash flow."