Seeking Alpha's top Quant picks in Consumer Discretionary sector ahead of Q3 earnings

The S&P 500’s Consumer Discretionary (NYSEARCA:XLY [https://seekingalpha.com/symbol/XLY]) sector gained [https://seekingalpha.com/symbol/XLY/charting] 9.8% from July through September, outperforming the broader S&P 500’s 7.91% growth in the same period.

However,the sector lagged Technology (XLK [https://seekingalpha.com/symbol/XLK]), which rose [https://seekingalpha.com/symbol/XLK/charting] 12.31%, and the Communication Services sector (XLC [https://seekingalpha.com/symbol/XLC]), which climbed [https://seekingalpha.com/symbol/XLC/charting] 9.85%, as investors continued to favor growth and AI-linked names.

According to Seeking Alpha's Quant Rating system, the Consumer Discretionary sector has an average health score [https://seekingalpha.com/account/portfolio/health-score?portfolioId=64902714] of 3.09. The system assigns grades based on quantitative factors such as valuation, earnings growth, profitability, and momentum, with the highest possible score for any company being 5.

Within the sector, six stocks are rated Buy or higher based on Quant Ratings, forty are rated Neutral, and two are rated Sell or below. The XLY ETF has gained 3.08% year-to-date [https://seekingalpha.com/symbol/XLY/charting?interval=YTD].

Amazon (AMZN [https://seekingalpha.com/symbol/AMZN]) leads the sector with the highest Quant score of 4.97, supported by an A+ in profitability. The e-commerce giant’s shares have risen [https://seekingalpha.com/article/4829790-amazon-is-well-positioned-to-capture-a-larger-share-of-the-cloud-computing-market] on the back of strong AWS growth, surging demand for generative AI services, improved retail efficiency, higher operating margins, and expanding advertising revenue.

McDonald's (MCD [https://seekingalpha.com/symbol/MCD]) follows with a Quant score of 4.39, also earning an A+ in profitability. The fast-food chain gained, buoyed by [https://seekingalpha.com/article/4822787-mcdonalds-focus-on-extra-value-deals-may-drive-easier-fy2026-comparisons] stronger franchise margins, a sharp rise in loyalty program engagement, and a renewed push for value meals that has helped stabilize customer traffic amid softer U.S. sales earlier in the year.

Among auto majors, Tesla (TSLA [https://seekingalpha.com/symbol/TSLA]) and General Motors (GM [https://seekingalpha.com/symbol/GM]) hold Quant scores of 3.35 and 3.42, respectively. Both have come under pressure as core business challenges weigh on earnings and margins. Tesla’s high valuation contrasts with its declining revenue and profitability [https://seekingalpha.com/article/4829827-tesla-stock-the-bubble-everyones-afraid-to-admit], while GM faces [https://seekingalpha.com/article/4827595-general-motors-not-the-time-for-a-premium] higher tariff costs and lowered forecasts. Despite these headwinds, investors continue to price in optimism that remains ahead of fundamentals.

Lululemon (LULU [https://seekingalpha.com/symbol/LULU]) has the lowest Quant score in the sector at 1.33, with a C- in valuation and an F in momentum. Shares have declined due to [https://seekingalpha.com/article/4827709-lululemon-a-contrarian-hunt-in-tariff-territory] weak U.S. sales, elevated inventories, and a projected $240 million gross profit hit from new tariffs and de minimis rule changes. The company’s reliance on China and reduced earnings guidance have further pressured sentiment and valuation.

The Consumer Discretionary sector has fallen [https://seekingalpha.com/symbol/XLY/charting?interval=1M] 3.13% over the past month.

“XLY has underperformed the broader market in 2025 due to economic uncertainty and sector-specific challenges, with a meaningful recovery not expected until 2026,” said a recent analysis [https://seekingalpha.com/article/4815796-xly-dont-expect-consumer-spending-to-notably-recover-until-2026] by OA Research.

The report added that Amazon and McDonald’s remain key pockets of resilience within the ETF, with Amazon’s strong Prime Day performance and McDonald’s steady sales growth helping to offset broader weakness across discretionary spending categories.

MORE ON THE CONSUMER DISCRETIONARY SELECT SECTOR SPDR® FUND ETF

* XLY: Don't Expect Consumer Spending To Notably Recover Until 2026 [https://seekingalpha.com/article/4815796-xly-dont-expect-consumer-spending-to-notably-recover-until-2026]
* XLY: An ETF That Tracks Consumer Strength And Weakness [https://seekingalpha.com/article/4813832-xly-etf-that-tracks-consumer-strength-and-weakness]
* XLY: Economic Growth And Rate Cuts Are Likely To Back Consumer Discretionary Sector [https://seekingalpha.com/article/4802684-xly-economic-growth-and-rate-cuts-are-likely-to-back-consumer-discretionary-sector]
* MGM Resorts tops list of most shorted S&P 500 consumer discretionary stocks in September; Amazon remains least shorted [https://seekingalpha.com/news/4503712-mgm-resorts-tops-list-of-most-shorted-sp-500-consumer-discretionary-stocks-in-september-amazon-remains-least-shorted]
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