Winning a coveted slot in the S & P 500 index almost always guarantees a boost in a company’s share price, and here are some of the candidates on the bench that may soon gain entry. The S & P 500 rebalance, which typically comes on the third Friday of the last month in a quarter, is usually an event that sparks billions of dollars of trading and spurs passive investment funds to snap up shares of the new companies being added to the index. Companies being added to the index can generally see such funds buying huge amounts of their shares in coming weeks. New additions have historically outperformed by an average 6% to 9% the day after the announcement, according to Stephens. Crypto exchange Coinbase was the latest beneficiary of such an inclusion. The stock skyrocketed 24% in the next trading session following the announcement last month. Stephens speculated that the financial services sector, the most underweight grouping in the S & P 500, may drive Interactive Brokers , the largest financial stock in S & P 400 Midcap index, to migrate to the 500. Stephens believes mechanical and electrical construction company Emcor Group , Vertiv Holdings and Ferguson Enterprises are three industrial stocks that might be eligible to make the move to the S & P 500. In the communication services sector, another underweight grouping in the S & P 500, potential candidates are Trade Desk , Reddit and Pinterest , according to Stephens. Among consumer discretionary stocks, used car dealer Carvana and sports betting firm Flutter Entertainment could ascend into the 500, while the only eligible energy stock is Cheniere Energy , the Wall Street firm said.
