As of Aug. 9, 91% of S&P 500 companies had released their latest quarterly earnings results, per FactSet data, with 78% surpassing consensus earnings per share (EPS) estimates. This figure slightly surpasses the 5-year average of 77% and the 10-year average of 74%.
With Q2 earnings season drawing to a close, Marketwatch recently screened for companies with the best quarterly performances, but went beyond the usual earnings beat-or-miss narrative. Instead, their screen highlights firms that increased revenue per share on a year over year basis, while simultaneously improving their operating and profit margins.
From their list of 20 stocks, here’s a closer look at five picks with consensus “Strong Buy” ratings from Wall Street analysts.
Stock #1: Eli Lilly
Commanding a hefty market cap of around $840.5 billion, Indianapolis-based pharmaceutical powerhouse Eli Lilly and Company (LLY) is dedicated to revolutionizing diabetes care, tackling obesity, advancing treatments for Alzheimer's, easing severe immune disorders, and making aggressive cancers more manageable.
The pharma giant has captured massive attention from investors thanks to its groundbreaking weight-loss drugs, Mounjaro and Zepbound, which are making waves in the industry. Shares of Eli Lilly have rallied 71.9% over the past 52 weeks and 55.8% on a YTD basis, far outpacing the broader S&P 500 Index ($SPX), which has gained 21.7% over the past 52 weeks and about 14% on a YTD basis.
Shares of this pharma giant skyrocketed 9.5% on Aug.8, following impressive Q2 earnings results that showcased a 36% annual revenue surge fueled by massive demand for Mounjaro, Zepbound, and Verzenio. With a stellar gross margin of 80.80%, up from 78.26% a year ago, and an operating margin leap to 41.75% from last year's 31.15%, the company is clearly on a winning streak.
Analysts maintain a consensus rating of “Strong Buy” on LLY stock, with a mean target price of $927.74. This indicates an expected upside potential of about 2.2% from current levels. Out of 22 analysts covering the stock, 19 advise a “Strong Buy” rating, one suggests a “Moderate Buy,” and the remaining two have a “Hold” rating.
Stock #2: Micron Technology
As a trailblazer in memory and storage solutions, Idaho-based Micron Technology, Inc. (MU) harnesses information to enhance lives globally. With a steadfast commitment to customer satisfaction, cutting-edge technology, and operational excellence, Micron delivers top-tier DRAM, NAND, and NOR products under the Micron and Crucial brands. The company’s daily innovations drive the data economy, powering advancements in artificial intelligence (AI), and complex applications from data centers to the intelligent edge.
Valued at $104.9 billion by market cap, shares of this chip giant have rallied 51.4% over the past 52 weeks, sailing past the SPX’s performance during this period.
On June 26, the company unveiled its fiscal Q3 earnings results, showcasing a spectacular 81.5% year-over-year revenue boost, fueled by surging AI demand and dominance in high-margin products like High-Bandwidth Memory (HBM). Micron’s profitability also soared, with gross margin hitting 26.90%, a stunning rebound from the previous year’s negative margin of 17.80%.
Meanwhile, operating margin stood at 38.85%, registering a notable improvement from the year-ago quarter’s 8.29% margin. This strong performance underscores Micron's remarkable turnaround and leadership in the industry.
Wall Street appears highly bullish on MU stock, giving it a consensus “Strong Buy” rating, with a mean target price of $163.52. This implies an impressive potential upside of nearly 67.8% from current levels. Of the 27 analysts tracking the stock, 24 recommend a “Strong Buy,” two suggest a “Moderate Buy,” and one advocates a “Hold” rating.
Stock #3: Royal Caribbean Cruises
With a market cap of $39.6 billion, Florida-based Royal Caribbean Cruises Ltd. (RCL) stands at the forefront of the vacation industry with a global fleet of 68 ships spanning five brands, and traveling to around 1,000 destinations. The company serves millions annually through brands like Royal Caribbean International, Celebrity Cruises, and Silversea, alongside its expanding land-based experiences such as Perfect Day at CocoCay and the Royal Beach Club collection.
RCL stock has surged 50.4% over the past 52 weeks and 19.4% on a YTD basis, outpacing the SPX’s gains during both these periods.
The cruise operator revealed its better-than-expected Q2 earnings results on July 25. Revenue for the quarter surged 16.7% annually, driven by exceptional demand for the company’s vacation offerings. Gross margins rose to 38.64%, up from 34.71% a year earlier, while operating margins surged to 36.79%, compared to 32.66% in the previous year’s quarter.
RCL stock has a consensus "Strong Buy" rating overall. Out of 17 analysts covering Royal Caribbean, 13 recommend a "Strong Buy," one advises “Moderate Buy,” and the remaining three have a "Hold" rating. The mean price target of $186.33 implies an expected upside of 20.5% from current levels.
Stock #4: First Solar
Valued at a market cap of $23.5 billion, Arizona-based First Solar, Inc. (FSLR) is a solar technology leader. Renowned for its innovative thin-film photovoltaic (PV) modules, First Solar provides a high-performance, lower-carbon alternative to traditional crystalline silicon (c-Si) PV panels, advancing the fight against climate change.
In 2024, shares of First Solar have climbed 33.7%, outperforming the SPX.
In addition to surpassing Wall Street’s expectations in its Q2 earnings report on July 30, First Solar also showcased impressive growth in sales and profitability metrics. Net sales shot up 24.7% annually, with gross margin improving to 49.02%, up from 38.05% in the same period last year. Operating margins also rose to 49.29%, compared to 37.28% in the prior year quarter.
Overall, FSLR stock has a consensus "Strong Buy" rating on Wall Street. Out of 30 analysts in coverage, 22 recommend a "Strong Buy," one advises a “Moderate Buy,” and the remaining one suggests a "Hold" rating. The mean price target of $291.11 implies expected upside of 26.4%.
Stock #5: Western Digital Corporation
California-based Western Digital Corporation (WDC) is a leading hard disk drive producer that designs, develops, and markets a wide array of HDDs for everything from desktop PCs and servers to video game consoles and digital video recorders. With renowned brands like Western Digital, SanDisk, and WD, the company serves a broad spectrum of markets, fueling the data-driven world.
Valued at $19.7 billion by market cap, shares of Western Digital have soared 47% over the past 52 weeks and 17.6% on a YTD basis.
Shares of Western Digital popped more than 6% on Jul. 31 after the company reported its Q4 earnings results, revealing a 41% year-over-year improvement in total revenue. Profitability also showed dramatic improvement, with gross margins skyrocketing to 35.95% from just 7.22% in the same period last year. Operating margins also improved significantly to 19.47%, bouncing back from the prior-year quarter’s negative margin of 11.64%.
Analysts maintain a consensus rating of “Strong Buy” on WDC stock, with a mean target price of $89.83. This indicates a solid 45.8% upside potential from current levels. Out of 21 analysts covering the stock, 16 advise a “Strong Buy” rating, and the remaining five have a “Hold” rating.
