The S&P 500 makes it easy to invest in the stock market. The famed index has 500 holdings and periodically replaces underperforming stocks with more promising picks. Many investors who don’t know much about the stock market prefer to invest in passive index funds that mirror benchmarks like the S&P 500.
However, there is a science for investors who want to outperform the S&P 500. One way to beat the index is to anticipate which stocks are likely to be added to the index in the future. A corporation must be profitable over the trailing 12 months and in the most recent quarter to be eligible.
Publicly traded corporations must also fulfill a market cap requirement and fulfill other parameters. These three growth stocks are potential S&P 500 additions within a few years. Buying shares now can result in long-term gains for patient investors.
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Beauty (ELF) E.l.f.
Beauty (NYSE: ELF ) is a cosmetics brand that continues to gain market share in the cosmetics industry. The stock has been a bit volatile lately but still holds onto an impressive 20% year-to-date gain. Shares are also up by almost 1,000% over the past five years, demonstrating the types of returns investors can find by looking beyond the S&P 500.
The beauty company has a $10 billion market cap, so it’s still removed from the minimum market cap requirement of $18.0 billion. However, e.
l.f Beauty’s fourth quarter results suggest it can reach the market cap requirement within a few years. The firm reported 71% ye.