Ferguson named ‘new pick’ by Baird on potential S&P 500 inclusion (NYSE: FERG)
Ferguson (New York stock market :FERG) was rated a “new pick” by Baird analysts on Tuesday on the possibility of the plumbing and heating products maker being added to the Standard & Poor’s 500 index (SP500) next month.
“Based on the new wording of the liquidity threshold, we believe that Ferguson (FERG) now meets all criteria for inclusion in the S&P 500 and could be added as early as mid-December,” according to Baird. “We expect this to generate passive buying as well as active investor interest once Ferguson (FERG) is part of many portfolio benchmarks.
To be included in the S&P 500, a company must demonstrate the liquidity of its shares by trading the dollar value of its market capitalization over the previous 365 days. Baird felt that Ferguson (FERG) the trading volume on the New York Stock Exchange and the London Stock Exchange meets this requirement, among other criteria.
Ferguson (FERG) last month increased its lines of credit $800 million for general corporate purposes.
“This additional liquidity demonstrates continued confidence in our business model and provides additional flexibility to continue investing in our capital priorities,” said Bill Brundage, Ferguson’s chief financial officer (FERG), said in a statement.
Other companies have extended their lines of credit to prepare for an economic downturn. Businesses can tap into revolving credit facilities to have more cash reserves during times of financial hardship.
Ferguson (FERG) reported sales growth up about 21% from a year earlier to $7.97 billion in the fiscal fourth quarter, as operating profit rose 23% to $814 million.
Shares of the company are down 35% this year through Nov. 21, compared to a 17% decline for the S&P 500 (SP500).
Contributor Seeking Alpha Heavy Moat Investments has a buy rating on Ferguson (FERG) because of its acquisition strategy. Contributor Opal Investment Research rates Ferguson (FERG) as a purchase on its valuation.
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