The S&P 500 index is one of the major indices in the world. It is made up of the biggest companies in the United States and has a combined market capitalization of more than $31 trillion.
It has also become a preferred avenue for most investors to pile their money. Overall, excluding dividends, the S&P 500 index has jumped by almost 100,000% since it was started.
In this article, we will look at some of the little-known companies in the index that you can invest in today.
S&P 500 chart
- Industry: Finance
- Market Cap: $13.52 billion
- 2020 revenue: $6.15 billion
Invesco is a relatively unknown financial conglomerate that is headquartered in Atlanta, Georgia. The company provides many investment solutions to millions of Americans. It has more than 8,000 employees globally and over $1.35 trillion in assets under management (AUM).
In general, the company offers its services across several segments, including money market, balanced, equity, fixed income, and alternatives. It provides these solutions to retail and institutional investors where it has more than $947 billion and $401 billion of assets in both. Perhaps, its best-known product is the Invesco QQQ product, which is an award-winning ETF that tracks the Nasdaq 100 index.
While Invesco is a big financial company, it is not widely known. Instead, many people know large financial companies like Goldman Sachs, Morgan Stanley, and JP Morgan.
There are several reasons why investing in Invesco makes sense.
First, the company is an ideal acquisition target as the financial industry continues to consolidate. For one, Morgan Stanley has already acquired Eaton Vance in a bid to grow its asset base. As such, there is a possibility that a bigger company could acquire it.
Second, Invesco has a good record of rewarding its shareholders. It has a dividend yield of about 2.17%, which is better than that of some of its competitors. This yield is backed by a payout ratio of 24.15%.
Third, the company is relatively cheaper than some of its peers based on its price-to-earnings multiples.
Invesco share price
The chart above shows that, after dropping in 2020, the stock has bounced back substantially.
DXC Technology (DXC)
- Industry: Technology
- Market cap: $10.55 billion
- 2020 revenue: $19.5 billion
DXC Technology is one of the biggest IT outsourcing companies that many Americans have never heard about. The company has a market capitalization of more than $10 billion and 6,000 customers globally.
The company’s segments are Global Business Services (GBS) and Global Infrastructure Services (GIS). The former segment includes the analytics and engineering, applications, and BPO services, while the latter has cloud and security, IT outsourcing, and the modern workplace.
Some of DXC’s customers are companies like Campbell Soup, Swiss Re, Wilton Re, and Lufthansa. DXC competes with companies like Infosys, Cognizant Technologies, and Accenture.
The DXC stock started to struggle in 2018 when the company reported weak successive quarterly results. Investors were also concerned about its acquisitions and its competitive environment. All this saw its share price drop from $97.45 to $7.95 in 2020. Since then, the shares have jumped by more than 400%.
DXC share price
DXC is a good technology company that works in the back-end of many companies. The management is currently running its turnaround strategy, and there is a possibility that a larger company will acquire it.
Applied Materials (AMAT)
- Industry: Materials
- Market capitalization: $125 billion
- 2020 revenue: $17.2 billion
Applied Materials is an S&P 500 company that many people have never heard about. Yet, it is a company that most Americans have used the products of indirectly.
AMAT provides critical products to companies in the semiconductor and display industries. Therefore, if you have a smartphone, there are chances that the company made the materials used in making its chips.
Similarly, if you have solar power in your home, there is a possibility that the company manufactured some of the components.
Applied Materials reports its results through its semiconductor, applied global services (AGS), and display and adjacent markets segments (AMS). The semiconductor segment is the largest, followed by AGS and DAM.
The company’s business has been growing as the world embraces the digital age. This has seen its revenue grow from more than $10.85 billion in 2016 to more than $17 billion in 2020. Its profits have also more than doubled from around $1.7 billion to over $3.6 billion.
Applied Materials stock
While Applied Materials is an expensive stock to invest in, its outlook is good because of its long-term contracts, large barriers to entry, and the growth of the semiconductor industry.
Robert Half International (RHI)
- Industry: Services
- Market cap: $10.2 billion
- 2020 revenue: $5.11 billion
Robert Half International is one of the leading staffing solutions companies in the United States. The company owns brands like OfficeTeam, Robert Half Direct, Robert Half Legal, The Creative Group, and Accountemps, among others.
The firm has more than 13,000 direct employees. It has also provided more than 150k employees to other companies.
There are several reasons why Robert Half makes a good investment.
First, after companies shed millions of jobs in 2020, many of them are searching for talent. This means that they will use the services provided by companies like Robert Half to find workers.
Second, while the industry is highly competitive, Robert Half has managed to gain a substantial market share over the years. It has also managed to create long-term relationships with thousands of customers in the United States and abroad.
Robert Half International stock
The chart above shows the overall performance of Robert Half’s stock price.
The S&P 500 is made up of the 500 largest companies in the United States. While many of these companies like Apple and Microsoft are well-known, many others are not famous. As such, it is clear that, by looking at these four companies, we have not scratched the surface yet. Therefore, you can look behind the surface and identify some little-known companies to invest in.