Only twelve days are left for the Ibex?s Comité Asesor Técnico (CAT) to meet in order to deliberate on what new companies should be added to the index, but it looks like Dia will be main contender jockeying for a spot. The decision, that would take effect after January 2, would push out Bolsas y Mercados (BME), which is the stock with the lowest average trading volume in the last three and six months.
Dia is the only candidate eligible to be added to the index based on trading volume,? said the Ahorro Corporación in a report. It is true that the distribution chain has not met requirements set by the CAT, which consist in being quoted for the entire control period (between June 1and November 30), but the stock´s daily volume for the past three months is on average 28 million euros and this figure makes the company the eleventh most-traded stock by volume on the Ibex 35, compared to nearly 6 million euros per day for BME.
Still, this would not be a barrier that prevents Dia from appearing on the index. ?It is not necessary that a stock be registered for the entire control period, only that the stock meets the other minimum qualifications,? explains the Sociedad de Bolsas. And what are these qualifications?
In the first place, the chosen company should have been traded for at least a third of the days in the control period. This is one screen that Dia passes, as with CAT?s other requirement. The average size of a stock?s capitalization should be greater than 0.30% of the index?s average capitalization (316.486 billion euros as of the close of yesterday?s session).
Dia has a capitalization level adjusted for free float (capital that circulates freely in the market) at 2.05 billion euros. This is 0.65% of the Ibex level. Dia meets the requirement, which was nonetheless sidestepped when Bankia went to become one of the fifteen companies with the biggest market cap.
Incorporating Dia into the index would send a strong buy signal that carries an 18% upside potential for a stock in a sector that has no other showing on the Ibex 35.
Jazztel up next?
Jazztel is a telecommunications company that is waiting in the wings to join the Ibex 35. The company?s free float adjusted market capitalization is 1.015 billion euros (equivalent to 0.32% of the total Ibex 35 market cap). However, Jazztel?s trading volume for the last three months is 23.5 million less than that of Dia. Do they have anything in common? Market consensus collected by FactSet recommends owning both stocks, a recommendation that Goldman Sachs also made earlier this week.
