S&P 500 Stocks — Scored by 5 Investment Models

Maintained by S&P Dow Jones Indices, the S&P 500 tracks approximately 503 large-capitalisation US companies with a combined market capitalisation covering roughly 80% of the total US equity market. It is not merely a list of big companies — it is a curated, quality-screened benchmark that defines how the financial world measures performance.

The inclusion bar is high. A company must show positive earnings in its most recent quarter and over the trailing four quarters combined. Market capitalisation must exceed roughly $18 billion. There are minimum requirements for public float and trading liquidity. A selection committee reviews the index quarterly, adding companies that have grown into eligibility and removing those that no longer meet the criteria.

For investors, this quality gate is the feature, not a technicality. It means every stock in the S&P 500 is profitable, liquid, and institutionally investable — an ideal universe for fundamental analysis. Unlike rules-based indices that include everything above a market cap threshold, the S&P 500 already filters out the weakest companies before you even open a screener.

Every S&P 500 stock receives a composite score from 0 to 10, blending four scoring axes:

Five investment models feed these axes: Piotroski F-Score and Buffett Quality Assessment drive the Quality axis. Graham Fair Value, Lynch PEG, and Greenblatt Magic Formula drive the Value axis. Momentum uses 6-month relative price strength. Timing equals min(Value, Momentum) — the value-trap killer.

Scoring weights are calibrated by sector. A bank is evaluated differently from a tech company, which is evaluated differently from a REIT. Seven sector-specific profiles ensure fair cross-sector comparisons.

The formula has been validated using walk-forward (out-of-sample) testing. A portfolio of the top 30 highest-scoring S&P 500 stocks, rebalanced monthly, delivered +8.4% annual alpha over the benchmark during the out-of-sample period. See the full backtest results for methodology details and disclaimers.

The S&P 500 spans all 11 GICS sectors, but the weighting tells a story of dominance. Information Technology alone accounts for roughly 30% of the index. The top 10 stocks represent over 35% of total capitalisation — a level of concentration not seen since the early 1970s. Materials and Real Estate each contribute less than 3%. When the “market” rallies, it is often 10 stocks pulling the other 493 along. Scoring each stock individually, as AlphaStocks does, reveals opportunities the cap-weighted index hides.

AlphaStocks addresses this imbalance through sector-calibrated scoring. Each sector has its own scoring profile, ensuring that a utility company earning a 7.5 genuinely compares to a tech company earning 7.5 — they simply reached that score through different evaluation criteria.