SP 500’s Top 10 Stocks and Style Box Update

These used to be the Top 10 names by market cap in the SP 500. Procter & Gamble and Visa have ascended to the Top 10, Bank of America and Exxon Have dropped out. Procter & Gamble is not in this list but is found below. (PG is not owned for clients, and neither is Exxon.) MasterCard is making a push to try and get into the top 10 as well.

 

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2019’s actual EPS was verified with Thomson Reuter’s Eikon (all but BRKB) but note the expected 2020 growth of the top 10 names after Q4 ’19’s earnings have been reported and guidance given.

It makes sense to stay with the mega-caps.

Top 10 SP 500 names by market cap: (SPY portfolio per Morningstar as of 2/14/2020)

  • 1.) Microsoft: 5.01%
  • 2.) Apple: 4.85%
  • 3.) Alphabet: 3.24%
  • 4.) Amazon: 3.20%
  • 5.) Facebook:  1.83%
  • 6.) Berkshire: 1.58%
  • 7.) JP Morgan: 1.55%
  • 8.) Johnson & Johnson: 1.41%
  • 9.) Visa: 1.27%
  • 10.) Procter & Gamble: 1.11%

 

  • Top 3 names as %: 13.7%
  • Top 5 names as %: 18%
  • Top 10 names as %: 25%

5 of the top 5 names are all Technology and Communication Services, still basically all Tech.

Summary / conclusion:  The “average” expected 2020 EPS growth for the top 10 names in the SP 500 by market cap is roughly 19% versus the expected 2020 SP 500 EPS growth (IBES by Refinitiv) of 8% per the latest “This Week in Earnings”. If Bank of America and Exxon are excluded since they have dropped out of the SP 500 Top 10, the remaining SP 500 earnings growth is still 16%.

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Style Box Strategy: 

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The iShares are used to track the various styles across the market caps. Not shown, but started in late 2019, was the Vanguard ETF’s tracking across their 6 style box ETF’s, large-to-small vcap, value to growth.

The small cap space has not shown significant out-performance since 2016, versus the large-cap styles.

Not really a surprise – this is well known by the market.

What went on in 2016 that caused Small-caps and Value to have such a great year ? Brexit, Presidential election, and the dollar was relatively weaker after peaking in early 2016.

Summary / conclusion: Both the Style Box update and the Top 10 SP 500 stocks are updated every 6 weeks so I thought that it was worth sharing with readers. Nothing here that hasn’t already been discussed in the mainstream financial media. The one metric that was surprising was the magnitude of earnings growth for the Top 10 SP 500 weights, versus the entire index.

Thanks for reading.

My personal email is brianglm@trinityasset.com if you have questions, comments, issues, suggestions, etc.

 

 

 

 

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