Changes are coming to the S&P 500 and Wall Street speculates these stocks could be added

These stocks could be poised to join the S & P 500 when the broad index undergoes its quarterly rebalance next month, according to some Wall Street analysts. Along with the esteem, there are some major benefits to inclusion in the index, with Barclays analyst Ramsey El-Assal noting that newly incorporated names experience 7.7% upside on average during the first trading day. Super Micro Computer and Deckers Outdoor were the most recent additions to the index , replacing Whirlpool and Zions Bancorporation , respectively, in March. Block is one contender poised for a spot in the coveted index, according to the firm. The payments company became eligible after reporting positive net income in the fourth quarter of 2023. While inclusion isn’t guaranteed, the stock “screens well” given the underweighting of financial services in the S & P, El-Assal said. “We estimate Financial Services is the second most underweight industry category represented in the S & P 500 index currently (Software & Services being the most under-represented),” he wrote. “We believe this underrepresentation makes SQ, with its $45B market cap, a likely candidate for inclusion.” A potential merger and acquisition of an existing member of the index may also create an opening for the stock, he added. SQ YTD mountain Shares this year Shares of Block have slumped about 8% this year, with the firm’s $100 price target implying nearly 40% upside, as of Wednesday’s close. Barclays holds an overweight rating on shares. Keefe Bruyette & Woods also views a financial services stock as a likely addition to the S & P 500, citing the sector’s underweight position. Analyst Shreyank Gandhi views both Square and Coinbase as potential “wild card” entries given their recent eligibility, citing the index’s preference toward newly qualified names. Above all, Gandhi views Dell as the most likely name to join given its size. Other candidates, but unlikely additions, include KKR and Apollo Global Management . There’s a “mid to high probability” that Erie resettles in the S & P 500. The S & P 500 isn’t the only index poised for potential changes. Gandhi sees a strong likelihood that Ryan Specialty Holdings joins the S & P Midcap 400, while New York Community Bancorp could drop down to the S & P SmallCap 600 . Axis Capital Holdings and BOK Financial could potential join that index, he added. The rebalance is expected to go into effect after the close on June 21. Changes will be announced June 7.