The S&P 500 surged 9.6% in the first half of 2026, with a 15% rally in the second quarter alone—the strongest quarterly performance since 2020. Yet beneath the headline numbers, Wall Street is increasingly looking beyond the AI-driven names that dominated the advance. As investors rotate out of crowded technology trades and navigate geopolitical uncertainties, including the Iran conflict, analysts are spotlighting companies with durable earnings, attractive valuations, and company-specific catalysts.
Recent research suggests the second half could reward a broader set of stocks. Here are five names analysts believe deserve a closer look this summer.
1. Yum Brands (NYSE: YUM)
UBS includes Yum Brands among its preferred low-volatility stocks, arguing that high-quality businesses have been overlooked as capital flooded into AI names. The owner of Taco Bell, KFC, and Habit Burger has generated cash flow returns on investment (CFROI) above 30% for most of the past decade—a level few consumer companies consistently achieve. UBS expects profitability to improve further, forecasting CFROI will reach a record high by 2027 as the company completes the divestiture of Pizza Hut, allowing management to focus on higher-growth opportunities. Analysts also see operational catalysts: Taco Bell's international expansion and a KFC loyalty program aimed at driving repeat spending. Shares have climbed over 10% this year to fresh 52-week highs, but analysts remain constructive on its durable cash flow generation.
2. Lockheed Martin (NYSE: LMT)
Defense stocks have drawn less attention than AI this year, but UBS believes Lockheed Martin could surprise. While maintaining a neutral rating, the firm expects a second-quarter earnings beat and raise, given a low bar. Longer-term catalysts include a potential seven-year, $35 billion award for the Terminal High Altitude Area Defense (THAAD) interceptor program, which could boost 2026 expectations. Stronger growth from the Missiles and Fire Control division is also anticipated as global defense spending remains elevated and missile orders accelerate. Despite cautious Wall Street sentiment—most analysts hold ratings—consensus price targets still imply meaningful upside.
3. McDonald's (NYSE: MCD)
McDonald's has lagged the broader market in 2026, with shares falling nearly 8% even as the S&P 500 hit records. UBS views this underperformance as an opportunity for stability-focused investors. While near-term macroeconomic pressures and softer consumer trends persist, the fast-food giant's global scale, strong brand, and defensive earnings profile position it well. Catalysts include initiatives to strengthen US sales growth and capture market share. With stretched valuations elsewhere, McDonald's offers earnings resilience and steady dividends. Wall Street broadly agrees, with a majority of analysts bullish and consensus targets implying roughly 17% upside over the next 12 months.
4. Under Armour (NYSE: UAA)
UBS analyst Jay Sole screened for retailers with technical signals historically leading to short-term outperformance, and Under Armour emerged as a high-conviction idea. The stock has risen 22% this year despite broader weakness in athletic apparel retail. While disappointing fourth-quarter earnings pressured shares, Sole argues investors underestimate the brand's value and management's ability to drive growth. Rather than a mature apparel business, UBS sees a recognized global brand that has underperformed its potential and could continue surprising as execution improves.
5. Toast (NYSE: TOST)
Goldman Sachs upgraded Toast to Buy from Neutral, citing the recent selloff—shares down about 20% this year on hardware cost and competition concerns—as an attractive entry point. The bank highlights Toast's AI-powered marketing platform, Toast IQ Grow, as a driver of higher software revenue per customer, while expansion into retail, enterprise, and international markets supports market share gains. Goldman raised its price target to $36, implying 26% upside from current levels.
The common thread among these five stocks is positioning away from crowded AI trades. As market leadership broadens, investors may find opportunities in overlooked names with resilient earnings and specific catalysts. For more on the shifting landscape, see Nasdaq Futures Jump 190 Points as Oil Retreats and Chip Stocks Rebound and Magnificent 7 Stocks Hit Decade-Low Valuation Premium Over S&P 500.
This article is for informational purposes only and does not constitute financial advice.
