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Investors Business Daily
Investors Business Daily
Business
MATT KRANTZ

8 Hot Big Stocks Aren't In The S&P 500 — But You'll Wish They Were

If you invest in the S&P 500, you assume you own the best big stocks. But you're still missing out on more large winners than you might realize.

Eight giant stocks left out of the S&P 500, including Dell Technologies, The Trade Desk and Apollo Global Management, are all beating the S&P 500 this year so far, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. And not by a little. They're up an average of more than 40% year to date, blowing away the S&P 500's 13% gain.

What's more, these are all giant and profitable companies in the S&P Completion index, too, despite not being in the S&P 500 yet. All sport market values of at least $30 billion, which is the median market capitalization of S&P 500 companies. Additionally, all posted a profit based on official accounting rules in the past 12 months.

Seeing such outperformance outside the S&P 500 is noteworthy. The rest of the S&P 500 is trending sideways in what Bespoke Investment Group calls, "No man's land."

Important Omissions In S&P 500

The S&P 500 is the world's most popular stock index. And for good reason. It captures more than 95% of the value of large U.S. stocks. But some top-performing stocks still fall through the cracks.

Take Dell Technologies for instance. It's a global technology leader with a market value of $50 billion. That means it would rank as the 155th most-valuable stock in the S&P 500. Except it's not in the S&P 500.

Even so, shares are up more than 74% this year, running circles around the S&P 500. It's a profit machine, too, earning more than $1.9 billion in unadjusted net income in the past 12 months. This fiscal year analysts think Dell's adjusted profit per share will fall 17%, but it will remain firmly in the black.

And it's not the only profitable tech sector winner left out of the S&P 500. VMware is up more than 35% this year. But even with a giant market value of $72 billion and $1.4 billion profit run rate, it's not in the S&P 500.

Big Favorites To Join S&P 500

The Trade Desk, a well-run manager of online advertising, is long favorited to join the S&P 500. Shares are up more than 67% this year, making the company worth $50 billion. And it just made $129 million in unadjusted net income in the past 12 months.

And the company is still growing fast. Analysts think its adjusted profit per share will rise nearly 20% this year to $1.24.

Meanwhile, some off-the-beaten-path financials are putting up big gains outside the S&P 500, too. Shares of private equity firms Apollo Global and KKR are up 45% and 37.3%, respectively, this year as investors think they'll find new investment opportunities despite higher interest rates. These are very large companies already, both sporting market values of $50 billion or more.

Again, the S&P 500 has you covered with nearly all big stocks you'd want to own. But when some are left out, that really stings.

Big Winners Not In The S&P 500

All are GAAP profitable in past 12 months and worth $50 billion or more

Company Ticker YTD % ch. Market value ($ billions) Sector
Dell Technologies 74.1% $50.7 Information Technology
The Trade Desk 67.5 36.8 Communication Services
Apollo Global Management 45.0 52.4 Financials
KKR 36.9 54.5 Financials
VMware 35.8 72.0 Information Technology
Veeva Systems 26.4 32.8 Health Care
Lululemon Athletica 20.0 48.6 Consumer Discretionary
Ferguson 19.0 30.7 Industrials
Source: S&P Global Market Intelligence, IBD
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