Marking top stock picks after earnings is vital for configuring a profitable investment portfolio. Here the focus is on three companies’ fundamentals to assess their growth potential and financial health.
The first company on the list specializes in data analytics and artificial intelligence (AI), demonstrating solid customer growth, which indicates rising market demand. Its strategic U.S. government contracts highlight its vital role in the commercial and governmental sectors. Meanwhile, the second company dominates the fast-food industry in China. The net addition of new stores reflects an aggressive expansion strategy. Its consistent profitability and strategic location choices (franchising) indicate its solid market presence.
Finally, the third company is a global entertainment leader renowned for its movies, theme parks and streaming services. Its streaming segment derived an over six million subscriber increase and higher average revenues per user, which points to sharp monetization and strong demand. Additionally, its successful sports segment derives significant viewership and ad revenue, cementing its market.
In short, with their solid fundamentals and strategic growth initiatives, these companies stand out as top stock picks after earnings, offering substantial returns and stability.
Palantir (PLTR)
Palantir (NYSE:PLTR) specializes in data analytics and AI. Its customer count grew by 42% year-over-year (YoY). Sequentially, it grew by 11%, reaching 554 customers by Q1 end. This growth shows increasing market acceptance and demand. The U.S. commercial sector saw remarkable growth. Palantir added 41 net new customers in Q1. Additionally, the U.S. customer count increased by 69% YoY and quarter-over-quarter by 19%. U.S. commercial revenue, excluding strategic investments, soared by 40% YoY, while quarter-over-quarter, it increased by 14%.
Moreover, customers like Lowe’s (NYSE:LOW), Cleveland Clinic and General Mills (NYSE:GIS) expanded their use of Palantir’s AIP. Lowe’s onboarded 1,000 customer service agents in three weeks, generating a 75% reduction in overdue tasks. U.S. government revenue grew by 12% YoY. Sequentially, it grew by 8%, reaching $257 million in Q1. Further, Palantir secured a $178 million U.S. Army contract under the TITAN program. This is the first time a software company has won a prime contract for a hardware system. Despite a 9% sequential decline, growth continues, the international government revenue grew by 33% YoY.
Overall, Palantir’s strong customer growth and strategic government contracts make it one of the top stock picks after earnings.
Yum China (YUMC)
The fast-food giant Yum China (NYSE:YUMC) operates several franchise stores, such as KFC and Pizza Hut, in China. Yum China’s core operating profit improved to $396 million from $392 million last year. The adjusted operating profit was the second highest in 30 quarters since the spin-off. Yum China shows strong earnings and cost management in competitive conditions. Yum China opened 378 net new stores, surpassing 15,000 stores. Moreover, this expansion indicates a strong growth strategy and confidence in China’s market. New store CapEx ranges from RMB 1.2 million to RMB 1.5 million.
Further, KFC’s small-town mini model has CapEx as low as RMB 0.5 million. About 30% of new stores are in new cities or strategic locations. This approach leverages high-foot-traffic areas to maximize sales. Franchising is key to Yum China’s strategy. In three years, 15-20% of net new stores will come from franchising. Additionally, in Q1, 19% of KFC’s net new stores were franchise-operated. Payback periods are steady at two years for KFC and improved to two to three years for Pizza Hut.
To conclude, Yum China’s aggressive expansion and consistent profitability highlight its high return potential, making it a high mark among top stock picks after earnings.
Walt Disney (DIS)
Walt Disney (NYSE:DIS) is a global entertainment giant. It is known for movies, theme parks and streaming services. In Disney’s streaming business, especially entertainment, achieving profitability is crucial. The addition of 6.3 million Disney+ subscribers shows strong demand. The increase in average revenue per user by $0.44 shows effective monetization. Strategies like price hikes and premium tiers drive this growth. Moreover, the streaming business is at the core of Disney’s future profitability, with content production central to its growth. Releases of films and series like “Shogun” drive subscriber growth.
Additionally, this ensures continuous user engagement and revenue generation. Disney’s content pipeline reinforces its leading position. Popular franchises bolster its competitive edge, supporting long-term growth in media and entertainment. The sports segment, mainly ESPN, delivers strong viewership and ad revenue. Indeed, record ratings for events like the NCAA Women’s Final Four highlight this. A 20% increase in domestic ad sales shows segment profitability. These metrics demonstrate ESPN’s market strength. ESPN can derive significant revenue growth for Disney.
To sum up, Disney’s profitability in streaming and strong content pipeline make it one of the top stock picks after earnings.
As of this writing, Yiannis Zourmpanos held long positions in PLTR and V. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a long position in DIS.
