Explore Two Recent Entrants in the S&P 500 Index: Their Shares Have Skyrocketed by 868% and 460% since IPOs, but Possible Changes Await in 2025, Suggest Wall Street Experts.
The S&P 500 is due for its quarterly rebalancing on Dec. 23, with two notable newcomers set to join the index. Let's delve into the recent successes of these two companies and the outlook for their stocks heading into 2025.
Apollo Global Management: A Spectacular 868% Climb since 2011 IPO
Apollo Global Management, popularly known as APO, is among the world's largest private equity companies, with a staggering $650 billion in assets under management. This PE titan has a diverse investment portfolio, focusing on various sectors and geographies that yield attractive risk-adjusted returns. Since its inception, their private equity fund has churned out net internal rates of return of 24%.
The success of Apollo Global Management mainly stems from its extensive experience in credit underwriting and origination. Apollo allocates an impressive $480 billion of its AUM to this strategic sector, which includes corporate fixed income and credit, structured credit, real estate debt, and direct origination. The rapid growth of its private credit business can largely be attributed to the intense regulation imposed on mainstream banks, which is shifting the traditional bank lending to companies like Apollo.
Banks have faced stricter capital requirements under President Biden's administration, which has significantly boosted the performance of APO's stock. However, wall street analysts remain cautious, with 13 buy ratings, 5 neutral assessments, and an average price target implying a slight downturn due to the stock's significant gains.
Workday: Up by 460% since 2012 IPO
Workday, a cloud-based human resources company, has also seen remarkable growth since its initial public offering in October 2012. With a stock price up by nearly 482% since, the company's platform helps manage businesses' people and financial matters with solutions like accounting for CFO's, vendor and contract management, and strong analytics.
Workday has ventured into AI territory by developing an AI marketplace and plans to roll out more AI capabilities in 2025. Despite the company's strong platform, challenges such as higher costs, intense competition, and a challenging labor market have led to slowing revenue growth. During Workday's third fiscal quarter of 2025, revenue grew by 3.6%, which is less than the S&P 500's impressive 28% increase.
However, Workday remains a favored stock among Wall Street analysts, with 21 buy ratings, 7 holds, and 1 sell rating, implying a modest upside of 3%. Despite the significant valuation, analysts remain optimistic about the company's potential to grow into its current position.
Sources:[1] MarketWatch[2] TipRanks[3] S&P Dow Jones Indices[4] Zacks Investment Research
In light of their successes, investors might consider adding Apollo Global Management (APO) and Workday to their portfolios for potential returns. Apollo's strategic focus on credit and private equity has led to impressive returns, while Workday's AI-driven solutions and strong market position make it an attractive option for long-term investors. To maximize profits, it's essential to stay updated on finance news and engage in strategic investing, including diversifying your portfolio and monitoring market trends.
