The S&P 500’s Communication Services (XLC) showed an impressive performance in 2025, claiming the spot for the second-best performing sector and outpacing the broader S&P 500 Index.
The sector, which holds 9% weightage on the S&P500 and boasts of companies including Google-parent Alphabet (GOOG), and Meta Platforms (META), rose over 21% last year, versus near 17% growth in the S&P 500 Index.
However, the sector gained just 0.9% during the fourth quarter, versus S&P 500’s 2% growth.
Investment in artificial intelligence infrastructure continued to grab limelight during the quarter. Tech giants including Meta and Google came under investors’ scrutiny, especially after announcing a rise in capital spending. Advertising stocks also faced significant headwinds in 2025 amid economic uncertainty.
According to Seeking Alpha’s Quant Rating system, the Communication Services sector has an average health score of 3.10 out of 5, based on 107 stocks with market capitalizations above $2 billion.
Looking into individual companies in the sector, 15 out of 22 stocks are rated as Buy and above based on Quant Ratings, 86 stocks are rated Neutral, and six are considered Sell or lower, with ratings based on valuation, growth, profitability, momentum and EPS revision.
Here are the top and bottom-rated 5 quant stocks ahead of the upcoming earning season:
The pre-earnings quantitative breakdown shows that top-rated stocks are being driven primarily by profitability and momentum, while the low-rated names reflect a sharp decline in the valuation factor.
Top 5 stocks: IHS Holding (IHS), Quant Rating 4.86; Strong Buy
Deutsche Telekom (DTEGY), Quant Rating 4.84; Strong Buy
Walt Disney (DIS), Quant Rating 4.60; Strong Buy
Millicom International Cellular (TIGO), Quant Rating 4.53; Strong Buy
Swisscom (SCMWY), Quant Rating 4.50; Strong Buy
Bottom 5 stocks: Rumble (RUM), Quant Rating 1.13; Strong Sell
Rightmov (RTMVY), Quant Rating 1.45; Strong Sell
Cinemark Holdings (CNK), Quant Rating 1.53; Sell
Cellnex Telecom (CLNXF), Quant Rating 1.76; Sell
Formula One Group (FWONA), Quant Rating 1.88; Sell
SA Analyst has a Buy rating on S&P 500’s Communication Services (XLC) with a score of 3.75.