MENU

Could Blackmores Limited shares shoot higher today?

Credit: Blackmores

What: Blackmores Limited (ASX: BKL) has taken the spot of Spotless Group Holdings Ltd (ASX: SPO) in the S&P/ASX 100 (Index: ^AXTO) (ASX: XTO).

Thanks to the S&P Dow Jones Indices June 2016 quarterly rebalance Blackmores can now count itself as part of Australia’s top 100 public companies.

Source: Google Finance

Source: Google Finance

So what: Without being considered a top 100 company, many fund managers may have been prohibited from buying Blackmores shares, until now. So with the help of other passive money managers such as index funds and ETFs, Blackmores shares could receive a welcome boost in the near future.

The index inclusion puts Blackmores on the radar of professional investors and their analysts. However, retail investors are also likely to take note of the company’s stellar performance and index inclusion as a signal of strength.

Conversely, investors may take Spotless Group’s removal as a sign of weakness.

Now what: Taking note of new index participants is a good way to identify potentially promising smaller companies.

Also included in today’s rebalance was the admission of a2 Milk Company Ltd (Australia) (ASX: A2M) into the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO). Like Blackmores, investors have attributed much of a2 Milk’s one-year 173% share price rally to the growing demand for quality consumer products from China.

If you haven’t already, it may be time to run the ruler over both Blackmores and a2 Milk shares.

Like Blackmores? Discover the 'new breed' of blue chips that could take your portfolio higher in 2016

These 3 "new breed" top blue chips for 2016 pay fully franked dividends and offer the very real prospect of significant capital appreciation. Click here to learn more.

The report is free! No credit card required.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned in this article. You can follow Owen on Twitter @ASXinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.