Following last week’s announcement that Apple will join the Dow Jones Industrial Average, a column in financial magazine Barron’s speculates that Wells Fargo could be the next company added to the more-than-100-year-old blue-chip index.
The column, written by Andrew Bary, points out that the largest companies ranked by market value that aren’t in the index are Wells Fargo, Google, Facebook and Warren Buffett’s Berkshire Hathaway.
Here’s an excerpt:
“Our bet is that Berkshire and Wells Fargo are the likeliest candidates. Google’s high stock price of $575 would make it tough for the S&P-Dow Jones index committee to add the search giant. The creation of Berkshire’s class B shares, recently $145, makes it easier to include Warren Buffett’s company.”
Apple, which at about $737 billion is the largest company in the world by market value, will be added to the Dow on March 19, replacing telecommunications giant AT&T.
The addition of Apple to the Dow marks the first shakeup in the index since 2013.
That was the year Charlotte-based Bank of America was dropped from the Dow, along with computer maker Hewlett-Packard Co. and aluminum firm Alcoa. They were replaced by Goldman Sachs, Nike and Visa. S&P Dow Jones Indices, which owns the Dow, cited the three companies’ low stock price, as well as a desire to diversify the index, in its announcement that they were being dropped.
The Dow represents 30 large U.S. companies across a variety of industries. It is part of the S&P Dow Jones Indices, which is a subsidiary of The McGraw-Hill Cos.
According to the website for the indices, a stock typically is added to the Dow “only if the company has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors.” Also, maintaining “adequate sector representation” is a factor when companies are being considered to be added to the indices, the site says.
San Francisco-based Wells Fargo employs roughly 22,100 people in the Charlotte area, making it the lender’s largest employee base.