S&P Dow Jones, which operates the Standard & Poor's 500 Index, tries hard to get the right stocks into the index.
Not in a snobby way. Real financial standards come into play.
💵💰Don't miss the move: Subscribe to TheStreet's free daily newsletter 💰💵
There are the minimums to qualify for S&P 500 membership. These include:
- A company must have a market capitalization of at least $20.5 billion.
- The company must be domiciled in the U.S.
- The company must be a corporation whose shares are listed on an exchange, such as the New York Stock Exchange, the Nasdaq system, or one of the CBOE exchanges.
- It can not be a limited partnership, master limited partnership, closed-end fund, limited liability company, special purpose acquisition company, or SPAC.
(SPACs had a brief bit of popularity in the past decade because they enabled companies to go public with limited documentation. Many SPACs quickly went broke.)
Related: 4 stocks whose earnings will rock markets this week
S&P 500 membership is coveted by company management because it suggests the company is real and successful.
Here are the changes to the S&P 500 that could happen in March
S&P Dow Jones also will change out companies from the S&P 500 as well as S&P Midcap 600 Index and Smallcap 400 Index. The organization looks over the memberships at least quarterly.
One of those quarterly examinations will come up in the next month or so. Changes will be made on the third Friday of March, to take effect on two Mondays later.
More Economic Analysis:
- Major fund manager reveals stock market forecast for 2025
- Every major Wall Street analyst's S&P 500 forecast for 2025
- Jobs report has big implications for Fed rate bets, Treasury yields
- Fed officials may drop a bombshell on interest rates this week
Keefe Bruyette & Woods, a boutique investment bank owned by Stifel Financial, (SF) , concentrates on research and underwriting financial stocks. It has a list of three financial stocks that could well be added to the S&P 500:
- Coinbase Global (COIN) operates one of the largest cryptocurrency platforms. It easily meets S&P's market cap requirements. The shares closed Friday at $298, down 5% but up 20% for the year. Its market cap is a more than adequate $74.6 billion. Keefe Bruyette thinks there is "a high likelihood" Coinbase will go into the S&P 500. The index is underweight financial stocks.
- Ares Management ARES, a giant player in the private credit market, has a mid-to-high probability of getting added. The Los Angeles company has a market cap of $61.7 billion.
- Block, (SQ) , the provider of the Square remote point of sale equipment. Its market cap is $55 billion. It also has a mid-to-high shot to get into the index.
Keefe Bruyette did not suggest any stocks to be removed, but there are plenty to choose from. As of Friday, 128 S&P 500 stocks had market caps less than the $20.5 billion requirement to get in.
These include:
- MGM Resorts (MGM) . Market cap: $9.8 billion
- Fertilizer company Mosaic (MOS) . Market cap: $8.96 billion.
- Toymaker Hasbro (HAS) . Market cap: $8 billion.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
