S&P 500: 10 stocks have everything to become the next Tesla soon


Tesla’s green light to join the S&P 500 instantly added $ 31 billion to investor portfolios. What titles could be next?


It turns out that applicants abound. Ten profitable large-cap companies with a market value of at least $ 35 billion, including tech stocks Focus on video communications (ZM), Square (SQ) and VMware (VMW), still do not appear in the S&P 500.And this despite the fact that it is more valuable than at least 97% of the companies in the world’s largest index, according to a Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. All stocks are included in the S&P Completion Index.

Tesla stock has shown that adding the S&P 500 is still a big deal. Shares of the electric vehicle maker climbed 8% on Tuesday upon learning that they will be added to the S&P 500 as of December 21. This translates to a one-day gain of $ 31 billion. The participation of CEO Elon Musk alone added nearly $ 6 billion. Keep in mind that the stock is now up over 400% this year.

“It’s a major feather in the course of the Tesla bulls after suffering a lot from not entering the S&P 500 in early September,” Wedbush Securities analyst Dan Ives said. “This is clearly a key positive for stocks and for indexing purposes and ultimately removes another question mark around Tesla’s story going forward. “

Video zoom: the next giant S&P 500 missing

You might think that owning the S&P 500 is all you need. And that argument is easier to make now with Tesla joining. But there are still gaping omissions.

Zoom Video is the most spectacular example. The video streaming company, founded in 2011, is now worth $ 114 billion. It’s profitable too, with a net profit of over $ 230 million in the past 12 months. It would be among the top 20% of the S&P 500 companies. And yet, it’s not there at all.

And the omission is costly. The S&P 500 missed a company whose stock has risen nearly 500% this year. It also carries an IBD Composite Rating of 99, which means its stock and fundamentals are above 99% of all other stocks.

Meets S&P 500 standards

Adding to the S&P 500 isn’t all about high market value. Unprofitable companies and those which remove shareholders’ rights are excluded.

UberLosses (UBER), totaling nearly $ 7 billion in the past 12 months, are a major reason the rideshare company is not in the S&P 500 despite having a market value of $ 86 billion. And Break(SNAP’s convoluted share class structure, along with losses, kept the $ 59 billion social media company from the S&P 500.

But what about online payment processing company Square, led by blue chip CEO Jack Dorsey? The tech payment company is valued at nearly $ 85 billion. It’s also very profitable, with $ 310 million in the last 12 months. And then there’s VMware, also run by a world-class CEO. The company not only made $ 1.6 billion in profit in the past 12 months. It’s worth $ 61 billion.

The technical problem of the S&P 500

The point is, tech companies are booming faster than the S&P 500 can absorb. Half of the 10 most valuable and profitable companies in the world are in the information technology industry.

This is a bit of a problem as tech stocks already account for 27.3% of the S&P 500. This is a higher concentration than any other in the 11 sectors of the S&P 500. Healthcare is far behind at 13. 95%.

And yet, technology is where the growth is. Closely related technology and communications services companies make up two-thirds of the Nasdaq 100. The Nasdaq 100 holds the 100 most valuable companies that trade on the Nasdaq.

But there are also good candidates for the S&P 500 outside of tech. Consumer discretionary Lululemon Athletica (LULU) is worth $ 44 billion and has earned $ 539 million in the past 12 months. And then there’s the $ 41 billion consumer staples business, Neat Dr Pepper (KDP). It has grossed over $ 1.3 billion in the past 12 months.

Just be patient. As Tesla shows, good things are happening to those waiting for the S&P 500.

S&P 500 bound?

The Most Valuable and Profitable US Companies Not in the S&P 500

Business Teleprinter Market capitalization (in millions of dollars) Net income last 12 months (in millions of dollars) Sector Note composite
Focus on video communications (ZM) 114 439,2 $ 230,6 $ Computer science 99
Square (SQ) 84 915,3 $ 310,1 $ Computer science 98
VMware (VMW) 61 300,8 $ 1 562 $ Computer science 66
Technologies Dell (DELL) 50 623,7 $ 2 098 $ Computer science 84
Lululemon Athletica (LULU) 44065,4 $ 539,4 $ Consumer discretionary 69
Neat Dr Pepper (KDP) 41 225,5 $ 1 303 $ Basic consumption 44
Veeva Systems (VEEV) 40 074,6 $ 328,5 $ Health care 94
Groupe Blackstone (BX) 39 931,3 $ 779,6 $ Finances 75
Le Trade Desk (TTD) 37 060,5 $ 141,4 $ Computer science 99
CoStar Group (CSGP) 36 163,6 $ 279,3 $ Industrial 90

Sources: IBD, S&P Global Market Intelligence


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