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 |
