How should an undergrad pick a journal to submit to? I am an undergraduate who has been doing research in a lab since my freshmen year, and I have usually just worked on projects with a PhD student. That being said, as of now I have co-authored two papers (both accepted) with said PhD student.

The professor has entrusted me to do my own research and he is really pushing that we publish a letter as soon as possible on the research I was doing, since no one in our (relatively new) subfield has even touched on this method. The first journal he said was Physical Review Letters (which made my eyes light up). Now though, he is leaning more to Applied Physics Letters or a much more specified journal.

I am looking to go into a PhD program in physics; should I submit to whatever journal my professor says to? He is very open and I think I could convince him to let me send it to Physical Review Letters but maybe he knows something I don't (like that it would be a waste of time - autorejection). Are there any other physics-based letters for broad and novel physics research?
Assuming your professor is not new at advising, he would have the best opinion on the matter since it is surely something he has dealt with before. If you are really unsure about this, express your concern and ask him why he would suggest one over the other, and then make your decision from there. 

Additionally, can you get input from the PhD student you are working with?

If all else fails, you may be able to talk to another professor in the same field to get a second opinion on this.