Changing places
Standard & Poor's remixes growth and value indexes
By Jonathan Burton, CBS.MarketWatch.com
Last Update: 12:11 AM ET June 16, 2003
marketwatch.com
SAN FRANCISCO (CBS.MW) -- Standard & Poor's is reshuffling some of the companies in several major U.S. indexes that mutual funds and institutional investors use to measure performance.
The New York-based financial data provider announced the semiannual changes after Friday's close, providing a list of large-, mid- and small-company stocks that are being switched between value and growth investment styles.
Changes will take effect at the close of trading next Friday.
Investors may be surprised to see value stocks such as Dow Chemical (DOW: news, chart, profile) and Home Depot (HD: news, chart, profile) join the growth universe, while former growth bellwethers Applied Materials (AMAT: news, chart, profile) and Schering-Plough (SGP: news, chart, profile) become avatars of value.
Growth stocks typically sell at higher multiples to a specific benchmark than their value-stock counterparts. A common barometer, for instance, is expected earnings growth. S&P uses "book-to-price" ratio -- the inverse of "price-to-book" value -- to determine if a stock belongs in the growth or value camp.
S&P divides a major index such as the S&P 500 (SPX: news, chart, profile) into two distinct groups of value and growth stocks, each of which comprises about half of the index's total market value.
The growth index contains stocks with lower book-to-price ratios -- companies whose shares trade at a high price to book value. The value index, in contrast, includes stocks whose book-to-price ratios are higher, meaning they trade at lower multiples of book value.
The S&P changes affect style-specific indexes including: S&P 500/Barra Value and S&P 500 Growth; S&P MidCap 400/Barra Value and S&P MidCap 400/Barra Growth, and S&P SmallCap 600/Barra Value and S&P SmallCap 600/Barra Growth.
S&P 500 stocks transferring to growth from value include Broadcom (BRCM: news, chart, profile), DuPont (DD: news, chart, profile), Monster Worldwide (MNST: news, chart, profile), Nike (NKE: news, chart, profile), T. Rowe Price Group (TROW: news, chart, profile), United Technologies (UTX: news, chart, profile), Veritas Software (VRTS: news, chart, profile) and Xerox (XRX: news, chart, profile).
Stocks in the S&P 500 switching to value from growth include such household names as Target (TGT: news, chart, profile), Staples (SPLS: news, chart, profile), Charles Schwab (SCH: news, chart, profile) and Verizon Communications (VZ: news, chart, profile).
S&P MidCap 400 companies moving to growth from value include Avocent (AVCT: news, chart, profile), Legato Systems (LGTO: news, chart, profile), Macromedia (MACR: news, chart, profile), Retek (RETK: news, chart, profile) and Storage Technology (STK: news, chart, profile).
S&P MidCap 400 (XX:1800511: news, chart, profile) stocks switching to value from growth include Federal Signal (FSS: news, chart, profile), International Speedway (ISCA: news, chart, profile), LifePoint Hospitals (LPNT: news, chart, profile), and Network Associates (NET: news, chart, profile).
Among the S&P SmallCap 600, stocks moving to growth from value include Actel (ACTL: news, chart, profile), Lone Star Technology (LSS: news, chart, profile), Maverick Tube (MVK: news, chart, profile), Netegrity (NETE: news, chart, profile), The Ryland Group (RYL: news, chart, profile), TETRA Technologies (TTI: news, chart, profile) and Verity (VRTY: news, chart, profile).
S&P SmallCap 600 stocks switching to value from growth include Cerner (CERN: news, chart, profile), DRS Technologies (DRS: news, chart, profile), InVision Technologies (INVN: news, chart, profile), Kroll (KROL: news, chart, profile), Maximus (MMS: news, chart, profile), Radiant Systems (RADS: news, chart, profile) and Roadway (ROAD: news, chart, profile).
Jonathan Burton covers the mutual fund industry for CBS MarketWatch.com |
