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Since stocks typically get a boost when they’re added to the S & P 500 — as index funds and investors tied to the benchmark are forced to buy the new constituents — attention is turning to a new group of companies that are candidates for inclusion. Several large-cap stocks now meet the eligibility requirements laid down by S & P Dow Jones Indices, a unit of S & P Global , according to Stephens, an investment bank based in Little Rock, Arkansas. The bank points to Marvell Technology , Vertiv , Strategy , Reddit and Alnylam Pharmaceuticals as the largest eligible candidates, ranked by size. With S & P 500 additions frequently delivering strong performance after the announcement, investors are watching these stocks closely ahead of the U.S. Index Committee’s next reshuffle scheduled for Friday. Sector dynamics could shape the final decisions, Stephens said in a report out Thursday. Communication services and financials remain underweight in the index compared to their size in the market, boosting the odds for Reddit and SoFi Technologies , the largest eligible financial stock with the highest float-adjusted liquidity among candidates. Data center infrastructure provider Vertiv could also benefit from pending M & A activity that may create index vacancies. Stephens also flags Ciena and Coherent — both in the S & P MidCap 400 Index — as “outsized” names that could be promoted to the S & P 500, a move that almost always triggers meaningful inflows. Not all large names are viewed equally. Strategy, despite its size, likely has lower odds of inclusion given the number of large eligible information technology candidates already in the pipeline, Stephens said.
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