When a stock is added to a prominent index like the S&P 500 Index ($SPX) or the Nasdaq Composite Index ($NASX), it is often a positive milestone. This inclusion brings significant inflows from exchange-traded funds and other index funds that track major indices. Inclusion also serves as a testament to the company's consistent performance and growth across revenue, profits, and operations.
With this in mind, two new stocks are expected to gain entry into the coveted S&P 500 on Dec. 23. Should investors add them to their portfolios? Let's find out.
S&P 500 Stock #1: Workday
Founded in 2005, Workday (WDAY) provides enterprise software solutions designed to help organizations manage their financial and human resources operations. Over 10,000 organizations use its platform, including more than 50% of the Fortune 500. Its market capitalization currently stands at $72.2 billion. WDAY stock is down slightly on a year-to-date basis.
However, the company has demonstrated impressive growth in its revenue and earnings over the past three years. The most recent quarter saw the company beat both revenue and earnings estimates. In the third quarter of its fiscal 2025, Workday reported revenue of $2.16 billion which denoted growth of 15.8% from the previous year. It also reported a 15.8% rise in subscription revenue to $1.959 billion.
Further, its earnings increased 21.2% from the prior year to $1.89 per share, comfortably outpacing the consensus estimate of $1.78 per share. Notably, this marked the 10th consecutive quarter of earnings beats from the company.
Another positive is that its 12-month subscription revenue backlog was up 15.4% to $6.98 billion, and its total subscription revenue backlog was up 20.3% to $22.19 billion.
Net cash from operating activities for the quarter stood at $406 million compared to $451 million in the year-ago period with free cash flows of $359 million. Overall, the company closed the quarter with a cash balance of $1.3 billion, much higher than short-term debt levels of $102 million.
Complementing its strong balance sheet are its strategic initiatives, which are driving growth and innovation.
For example, the adoption rate of Workday's AI solutions is steadily increasing. The company said that in Q3, 30% of its customer expansions include one of its AI tools. Recruiter Agent – one of those tools – has boosted the average selling price of main recruiting tool by approximately 150%.
Additionally, Workday's significant presence in the enterprise resource planning (ERP) industry solidifies its competitive position. With around 20% market share as of its Q2, it is the largest company in the space, operating across 175 countries and serving 70 million users. As a Fortune 500 company, Workday provides solutions to over 50% of other Fortune 500 companies, underscoring the high caliber and scale of its clients.
Thus, analysts have deemed the stock a “Moderate Buy” with a mean target price of $288.27 which indicates upside potential of about 6% from current levels. Out of 35 analysts covering the stock, 23 have a “Strong Buy” rating, 9 have a “Hold” rating, 2 have a “Moderate Buy” rating and 1 has a “Strong Sell” rating.
S&P 500 Stock #2: Apollo Global
Founded in 1990, Apollo Global (APO) specializes in private equity, credit, and real assets, managing investments across various asset classes. The firm is a leader in permanent capital solutions, with a substantial portion of its assets under management (AUM) comprised of long-duration funds. The company currently commands a market cap of $101 billion.
APO stock has witnessed a significant rally this year, soaring 89.7% on a YTD basis. The stock also offers a dividend yield of 1.02%.
In the most recent quarter, Apollo reported a beat on both revenue and earnings. Revenue jumped almost 200% to $7.78 billion with net investment income of $4.1 billion serving as the primary contributor to overall growth. Earnings for the quarter came in at $1.85 per share which denoted growth of 8.2% from the year-ago period.
Total AUM stood at $733 billion at the end of the quarter, rising from $631 billion in the previous year. Fee-generating AUM also witnessed an increase, growing from $468 billion to $551 billion.
The boom in the private credit market is particularly advantageous for Apollo. Its leading position and significant scale enable it to fully capitalize on a multibillion-dollar growth opportunity. Private credit has consistently proven to be a superior asset class, delivering higher returns than equities over time, while also exhibiting less volatility.
Apollo is also optimistic about a wide range of investable opportunities. The company sees trillions of dollars in potential growth tied to emerging trends such as decarbonization, deglobalization, and digital infrastructure. Overall, Apollo estimates its addressable market to be around $40 trillion, spanning areas like corporate loans and rental car financing.
In addition, Apollo is making significant strides in wealth management, supported by a team of nearly 200 investment professionals. The company has launched 10 products in the semi-liquid category, which are generating approximately $1 billion in monthly sales.
Finally, Apollo’s insurance subsidiary, Athene, is a market leader in annuities. Athene has achieved double-digit annual growth over the past decade, including an impressive 20%-30% growth rate in the last two years. This strong performance underscores its importance to Apollo’s overall strategy.
Considering this, analysts have assigned a rating of “Strong Buy” for the stock with a mean target price that has already been surpassed. The high target price of $230 denotes upside potential of about 29% from current levels. Out of 20 analysts covering the stock, 14 have a “Strong Buy” rating, 5 have a “Hold” rating and 1 has a “Moderate Buy” rating.
