First Solar, Sunpower Likely to Be Added to the Nasdaq 100 This Month

Includes: FSLR, QQQ, SPWR
by: Andrew Ling

Each year the Nasdaq 100 is reorganized to include most of the 100 largest non-financial stocks from the exchange. Market underpeformers which are no longer among the top 100 Nasdaq stocks by market cap are removed from the index each year in December and replaced with new large caps.

For example, in 2005 Google (NASDAQ:GOOG) was added to the QQQQ on Dec 13th. In 2006 Infosys (NASDAQ:INFY) was added on Dec 11th. Assuming about 10 stocks are removed this year, any non-financial with a market cap over about $8 billion should make it in. This would make First Solar (NASDAQ:FSLR) nearly a lock and SunPower's (NASDAQ:SPWR) addition is probable barring a major selloff within the next few weeks.

Being added to the QQQQ can definitely be seen as a bullish indicator. Market makers are forced to buy shares of the individual components of the QQQQ in order to match their clients' ETF holdings. In addition, it can bring recognition to companies that most retail investors have never heard of, essentially acting as free marketing.

Disclosure: Author is long FSLR and SPWR.

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