The Elite 25: Top Stocks in the S&P 500

The S&P 500 is composed of 500 companies that have collectively issued 503 securities. Alphabet is one example of a company that has issued multiple classes of shares. The official S&P Global website displays the top 10 greatest holdings. In order to be included as a constituent within the S&P 500 index, a company must satisfy specific criteria.

Nevertheless, S&P does not currently offer a comprehensive list of holdings, at least not for free. The entire roster is accessible to subscribers of Capital IQ, S&P’s research unit. The S&P 500 companies are a metric of U.S. economic activity and are considered the most prominent companies in their respective industries.

Inclusion Criteria for the S&P 500 Index:

The S&P 500, which was established in 1957, is one of the most frequently quoted stock market indexes. The greatest publicly traded companies in the United States are represented by the S&P 500 stocks. The S&P 500 concentrates on the large-cap sector of the U.S. market.

In order to be included in the S&P 500 index, a company must satisfy a comprehensive set of criteria, which includes the following:

• A minimum of $14.5 billion in total market capitalization
• A company that is based in the United States is required.
• A float-adjusted liquidity ratio (FALR) that is either equal to or greater than 0.75
• A sum of the most recent four consecutive quarters of trailing earnings that is positive
• The most recent quarter’s earnings were positive.
• Must satisfy specific liquidity criteria

Calculation of the S&P 500 Index:

The S&P 500 is a market capitalization-weighted index that is free-floating. The total dollar market value of a company’s outstanding equity shares is denoted by market capitalization. The company’s current stock price is multiplied by the total number of outstanding shares of stock to determine the market capitalization. For instance, a company with 20 million shares in circulation and a stock price of $100 per share would have a market capitalization of $2 billion.

Consequently, the greater the value of an individual company’s stock, the more it contributes to the S&P 500’s overall return. It is not uncommon for the index’s return to be approximately three-quarters attributed to a mere 50 to 75 securities.

Consequently, the aggregate return of the index will not be significantly affected by the addition or removal of smaller companies; however, the removal or addition of even a single of the largest stocks can have a large impact.

Sector Analysis of the S&P 500 Index:

The S&P 500 index’s leading sectors and their weightings as of August 31, 2023, are listed below.

1. 28.2% of the workforce is employed in information technology.
2. Healthcare accounts for approximately 13.2% of the total.
3. Financials: 12.5%
4. Consumer Discretionary: 10.6%
5. Communication Services: 8.8%
6. Industrials account for 8.4% of the total.
7. Consumer Staples: 6.6%
8. Energy: 4.4%
9. 2.5% of the materials
10. Real estate accounts for 2.4% of the total.
11. 2.4% of the total is allocated to utilities.

It is crucial to be cognizant of the S&P’s sector weighting, as sectors with a lower weighting may not have a significant impact on the overall index’s value, regardless of whether they are outperforming or underperforming the market.

For example, the energy sector’s profits may increase as oil prices rise; however, these equities account for only 4.4% of the S&P 500. Consequently, the S&P may not experience an increase in response to oil equities if, for instance, the information technology sector, which is more heavily weighted, is underperforming.

The twenty-five most valuable components in terms of market capitalization:

The SPDR S&P 500 Trust ETF (SPY) provides the precise weightings of the top 25 components, as they are not directly available from S&P. As of September 20, 2023, SPY is the oldest exchange-traded fund (ETF) that tracks the S&P 500. It is extensively traded and has $406.6 billion in assets under management (AUM).

As a result, the SPY’s portfolio weightings serve as an effective proxy for investing in the underlying S&P 500 index, despite the fact that the two may not be identical. The 25 greatest S&P 500 index constituents by weight as of September 21, 2023 are as follows:

1. Apple (AAPL): 7.05%
2. Microsoft (MSFT): 6.54%
3. Amazon (AMZN): 3.24%
4. NVIDIA (NVDA): 2.79%
5. Alphabet Class A (GOOGL): 2.13%
6. Tesla (TSLA): 1.95%
7. Alphabet Class C (GOOG): 1.83%
8. Berkshire Hathaway (BRK.B): 1.83%
9. Class A: Meta (META), formerly Facebook: 1.81%
10. UnitedHealth Group (UNH): 1.28%
11. Exxon Mobil (XOM): 1.27%
12. Eli Lilly (LLY): 1.21%
13. JPMorgan Chase (JPM): 1.18%
14. Johnson & Johnson (JNJ): 1.07%
15. Visa Class A (V): 1.05%
16. Procter & Gamble (PG): 0.99%
17. Mastercard Class A (MA): 0.93%
18. Broadcom (AVGO): 0.92%
19. Home Depot (HD): 0.85%
20. Chevron Corporation (CVX): 0.81%
21. Merck (MRK): 0.75%
22. AbbVie (ABBV): 0.75%
23. Costco (COST): 0.67%
24. PepsiCo (PEP): 0.67%
25. Adobe (ADBE): 0.65%

What is the total number of companies in the S&P 500?

Despite the fact that the index typically contains 500 companies, this figure has increased. As of August 31, 2023, the S&P 500 consisted of 503 equities. This is due to the fact that certain corporations, such as Alphabet, have multiple classes of equity shares.

What is the process for selecting companies for the S&P 500?

• In order to be included in the S&P 500, a company must satisfy specific criteria, such as:
• A minimum market capitalization of $14.5 billion
• A company that is based in the United States is required.
• A float-adjusted liquidity ratio (FALR) that is either equal to or greater than 0.75
• The aggregate of the most recent four consecutive quarters’ positive earnings
• An earnings report that is profitable for the most recent quarter of the company
• Minimum liquidity requirements