There’s a slew of stocks with more room to run ahead of earnings, according to Morgan Stanley. The firm’s analysts believe stocks such as AT & T are must-owns as the quarterly reporting season continues, they said. Other overweight-rated names include: Yum China, Starbucks , O’Reilly Automotive and Clearwater Analytics. Yum China Buy the dip in shares of the owner of Pizza Hut and KFC in China, the bank said. “We expect improvement in sales and continue to favor its solid business model and return visibility” analyst Lillian Lou wrote ahead of earnings in early August. The firm reiterated the company as a top pick and said shares have plenty of upside. Yum China’s long-term growth also looks “sustainable,” Lou said, making the stock extremely well positioned. “”We expect SSSG [same-store sales growth] uptick from 2Q25 onward, with potential higher delivery orders as the short-term catalyst,” she added Yum China shares are up 5% this month. Starbucks The firm is also standing by shares of the coffee chain giant ahead of its early August earnings report. Analyst Brian Harbour said he sees signs of “stabilization” in the US which he believes is a reason for shareholder optimism. The firm admitted that the setup is not overly compelling heading into this particular quarterly report, but patient shareholders will be rewarded, he says. Harbour cited positive catalysts like “sales stability, and the broader turnaround narrative, which we think continues to offer more detail, and an increasingly clear vision for what Starbucks should be,” he wrote. In addition, Harbour sees lower spot coffee prices as a tailwind along with robust investments in international. Starbucks shares are up 3% this year. AT & T Analyst Benjamin Swinburne said the telecommunications company is firing on all cylinders. Swinburne reinstated AT & T as a top idea earlier this week along with raising his price target to $32 per share from $31. “Despite its continued outperformance, we still see T shares offering the most compelling risk/reward in the coverage group,” he wrote. The firm said it likes the company’s “fiber growth and now lower cash taxes relatively insulate it from any potential wireless industry slowdown,” he added. Meanwhile shares of the company are up 18% this year. AT & T is scheduled to report earnings on July 23. Yum China “We expect improvement in sales and continue to favor its solid business model and return visibility. … We expect SSSG uptick from 2Q25 onward, with potential higher delivery orders as the short-term catalyst. … We reiterate our view that YUMC is set for long-term sustainable growth.” Starbucks “Stabilization in the US we think reasonably appreciated, and key for stock lately. … But stock strength we would attribute to US sales stability, and the broader turnaround narrative, which we think continues to offer more detail, and an increasingly clear vision for what Starbucks should be.” AT & T “We reinstate OW T as Top Pick. AT & T’s fiber growth and now lower cash taxes relatively insulate it from any potential wireless industry slowdown. … Despite its continued outperformance, we still see T shares offering the most compelling risk/reward in the coverage group.” Clearwater Analytics “Tactical weakness + high probability of upward estimate revisions + wall of worry on acquisitions and the implied 4Q exit rate creates a compelling opportunity to initiate / add to CWAN positions in advance of pending beats and a catalyst-rich September. Remain OW.” O’Reilly “Risk/reward skews positive and is attractive given a favorable industry backdrop. ORLY is relatively well insulated from the dynamic tariff environment due to its pricing power and buying leverage; during the heightened tariffs in late 2018-2019, ORLY consistently comped 3-4% and gross margins expanded ~35-45 bps y/y, driven by improvements in acquisition costs, favorable mix of DIFM [do it for me], and benefits from the pass through of price increases.”
