CRH PLC (CRH.US), Carvana Co. (CVNA.US), and Comfort Systems USA (FIX.US) Added to S&P 500 Index

Stock News08:38

CRH PLC (CRH.US), Carvana Co. (CVNA.US), and Comfort Systems USA (FIX.US) have been included in the S&P 500 Index, with the three companies set to join the benchmark index during the quarterly rebalancing at the end of December. Meanwhile, LKQ Corp. (LKQ.US), Solstice Advanced Materials (SOLS.US), and Mohawk Industries (MOK.US) will be removed, with the changes taking effect before the market opens on December 22.

Following the announcement, shares of used-car retailer Carvana and building materials firm CRH PLC both rose approximately 7% in after-hours trading on Friday. Heating and ventilation company Comfort Systems USA also saw a 2% increase.

For Tempe, Arizona-based Carvana, this marks a significant milestone. The company’s stock has surged from under $4 in 2022 to around $400 currently—a staggering 10,000% gain—driven by cost-cutting measures and debt restructuring, which improved profitability. Carvana reported selling a record 156,000 vehicles in its most recent quarter.

The rise of passive investing has made inclusion in major U.S. stock indices increasingly important, as index-tracking funds boost demand for the added stocks. To qualify for the S&P 500, companies must meet criteria such as a minimum market capitalization of $22.7 billion, profitability, liquidity, and sufficient public float.

Removal from the index can negatively impact stock prices, as index funds sell shares to realign with the S&P 500’s new composition. Analysts noted that Carvana, CRH PLC, and Comfort Systems USA were strong candidates for inclusion.

Following Friday’s announcement, Carvana’s addition is seen as enhancing sector diversification while meeting the index’s criteria. The stock has surged nearly 100% year-to-date.

Matt Maley, Chief Market Strategist at Miller Tabak + Co., cautioned that post-announcement stock rallies are often short-lived. "Demand spikes initially but fades quickly once the stocks are officially added," he said. However, he acknowledged that such announcements remain significant given the popularity of index-tracking funds.

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