Oil refining company Delek US Holdings (DK +5.30%) took a turn in the investor spotlight Tuesday. Its equity is soon to become a component of a noted small-cap stock index, and that increased visibility is already making the company more popular. It closed the day more than 5% higher.
1 of a special 600
As part of its regular quarterly rebalancing, S&P Dow Jones Indices -- the unit of S&P Global that manages the popular S&P series of stock market gauges -- announced a series of changes to several indexes.
Image source: Getty Images.
Among these is Delek's ascension to the S&P SmallCap 600 index, as part of a group of incoming stocks that includes titles as varied as Boston Beer, The Trade Desk, and Capri Holdings.
The new class displaces from the index such companies as Brinker International -- "graduating" to the S&P MidCap 400 index -- and Cogent Communications.
These changes will become effective prior to market open on Monday, Sept. 21.
NYSE: DK
Key Data Points
Consider buying, but not for the immediate reason
Far more often than not, the price of a stock newly included in a well-known index sees a quick pop following the announcement. That's mainly because it instantly becomes a candidate for inclusion in the portfolios of index funds that constantly trawl instruments like the S&P SmallCap 600 index and its ilk. The increased visibility as an S&P index component doesn't hurt either.
We should bear firmly in mind that such inclusion changes little or nothing about a company's fundamentals. That being said, I feel Delek stock has upside potential, especially given the current state of its small refinery exemptions.
