Here's the somewhat surprising stock that will soon join the S&P 500

By Emily Bary

In replacing Hologic, the index committee at S&P Dow Jones opted for a convenience-store retailer instead of another healthcare company

Casey's General Stores is getting bumped up from the S&P MidCap 400 index.

The S&P 500 is getting a bit of a shake-up later this week, as an operator of convenience stores joins the benchmark index.

Hologic's (HOLX) buyout deal with private-equity firms Blackstone (BX) and TPG (TPG) is expected to close Tuesday, meaning that a spot is opening up in the S&P 500 SPX. And S&P Dow Jones Indices just announced that Casey's General Stores (CASY) will be the newest entrant in the index, effective Thursday.

The committee at S&P Dow Jones Indices has latitude in determining which companies make it into the S&P 500, as long as the new entrants meet various criteria around profitability, market capitalization and more. The index isn't just a compilation of the largest U.S. companies, and the largest eligible candidates don't always get the nod when it's time to make changes.

Still, the choice of Casey's is somewhat surprising. Ahead of the announcement, Stephens analyst Melissa Roberts wrote that the company had a "lower likelihood" of selection than some of the other eligible names.

For instance, Hologic is a medical-technology provider, and several healthcare companies were candidates for inclusion and either comparable to or larger than Casey's when it came to their market values. There was Alnylam Pharmaceuticals (ALNY), which makes RNA interference medicines, as well as Veeva Systems (VEEV), a life-sciences software company.

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Meanwhile, chip maker Marvell Technology (MRVL), worth about $96 billion, was by far the largest eligible candidate when looking across sectors. For comparison, Casey's has a market cap of about $28 billion.

Casey's is getting elevated from the S&P MidCap 400 MID. Migrating components within the S&P 1500 universe can mitigate disruption caused by index changes. Marvell, Alnylam and Veeva all would have been pure new entrants, as they aren't currently in one of the three flagship indexes that make up the S&P 1500.

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Shares of Casey's were up about 1% in after-hours trading Monday. Marvell's stock was down 2%, while Alnylam's was losing 2.6% and Veeva shares were slipping 1.6%.

Some investors speculate about forthcoming entrants ahead of the official announcement and buy up shares, on the expectation that they could rise if a company is named to the index. However, this speculative process can lead to selling in shares of companies that don't end up getting chosen.

-Emily Bary

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04-06-26 1803ET