Enphase Energy joins the S&P 500 index

Enphase Energy (NASDAQ: ENPH) will start the new year on a high note as the company has been invited to join the S&P 500 Index. This will happen before the market opens next Thursday, January 7th.

S&P 500 operator S&P Dow Jones Indices announced the news on Wednesday. With its rise, Enphase replaces the manufacturer of luxury goods Tiffany and company. Following a rather tortuous takeover saga, LVMH Moët Hennessy Louis Vuitton acquires Tiffany, which will therefore cease to be an independent company.

Enphase isn’t really new to the S&P index table. For the moment, he belongs to the S&P MidCap 400 index. Completing his position on this index will be Capri Holdings, a fashion company founded by famous American designer Michael Kors (his company, it turns out, was once a component of the S&P 500).

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On Thursday, Enphase stock closed almost 1.5% higher, well outpacing the gains of the index it will soon join. This is often what happens when companies “switch” to the S&P 500, as investors anxiously expect greater visibility of a stock.

They also hope that stocks will benefit from inclusion in some of the very many popular index funds currently on the market; As a benchmark stock index, the S&P 500 is a fertile hunting ground for managers of such instruments.

However, existing and potential Enphase shareholders should be aware that research has generally shown that this initial pop doesn’t last. While this is certainly good news for the company, its fundamental performance will have a far greater impact on the attractiveness of the stock than its inclusion in the rarefied club of S&P 500 index constituents. .