Citi analyst Deborah Weinswig has an interesting note out this morning with an idea of which company will likely be added to the S&P 500 index next.
The company: Dollar General, the largest dollar store operator in the U.S.
Until recently, public float in Dollar General fell below criteria set by Standard & Poor’s for inclusion in the index. However, a recent secondary offering pushed float in the company above the 50 per cent mark.
With the offering, the Goodlettsville, Tenn., based company now satisfies all seven of the indexes requirements.
This week, S&P announced Fossil would replace Medco Health on the list, a move to rebalance the portfolio of companies. Standard & Poor’s has a committee that ultimately decides inclusion into its main index, and companies cannot apply for listing. However the index remains substantively underweight retail, making the addition of a retailer like Dollar General appealing.
Below, the criteria for inclusion in the S&P 500 compared to the characteristics of Dollar General.