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HomeFinance NewsPotential S&P 500 candidates: These stocks may be next in line.

Potential S&P 500 candidates: These stocks may be next in line.

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Bank of America predicts that several companies, including KKR, Apollo Global Management, Ares Management, and Workday, could soon be added to the S&P 500 index. The bank believes that these additions could lead to a boost in their stock prices. In particular, Bank of America expects KKR to be the next investment management firm to join the index, with the analyst setting a $109 price objective for KKR, implying a 23% upside from Monday’s close. The bank also notes that the inflows from passive ETFs into the S&P 500, which is the “most replicated index in the world,” will help support the share prices of the stocks in the index.

According to Craig Siegenthaler, an analyst at Bank of America, KKR, with a market cap of roughly $78 billion, is likely to be added to the S&P 500 within the next six months following Blackstone’s addition to the index last year. Additionally, Siegenthaler believes that Apollo Global Management, worth $58 billion, and Ares Management, a $38 billion company, will also be added to the index as the next wealth managers. Furthermore, Siegenthaler identifies Workday, a $76 billion enterprise software company, as the most likely candidate for addition to the S&P 500, as the index is more underweight tech than it is financials.

Overall, Bank of America’s analysis suggests that the addition of these companies to the S&P 500 is likely to drive up their stock prices, with passive ETFs and index funds benchmarked to the index providing significant inflows that will further support share prices. This prediction is based on the fact that passive ETFs benchmarked to the S&P 500 currently own 17% of the float of its constituent companies on average, and the continued growth and inflows of these ETFs will contribute to the upward movement of stock prices for companies added to the index.

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