As per the latest S&P/Dow Jones quarterly index changes for the Australian market, Xero Ltd (ASX: XRO) and Bellamy’s Australia Ltd (ASX: BAL) have been added to the S&P/ASX 200 index while department store operator Myer Holdings Ltd (ASX: MYR) has been excluded. Primarily, observation on the six-months’ average float-adjusted market capitalisation by ranking and liquidity leads to these changes in the index and the latest ones are effective from March 19, 2018.

Particularly, Myer’s stock price slump of about 61% in last one year has pulled down its market capitalisation from $950 million to about $374 million, and in the wake of the above news, the stock lost a further 4.4% on March 09, 2018. While the group is on the hunt of a new CEO and MD post the stepping down of Richard Umbers, Myer’s expectations of 1H 2018 NPAT to be materially below the prior corresponding period owing to deteriorating trading conditions have led to the stock freefall in the recent times.We have a “Hold” recommendation on MYR amidst the testing time.

On the other hand, with the addition to S&P/ASX 200 Index, BAL surged 2.8% on March 09, 2018.In the last six months, the stock has resurrected well with a 164.6% rise. The stock has found support from its latest first-half statutory profit that more than tripled at the back of increase in demand of its infant formula and lower operating costs during the period. The NPAT at $22.4 Mn in first half of the year has marked a significant growth on year-on-year basis. The stock is now quite close to its 52-week high level and we recommend the investors to “Hold” the stock.

Xero is another player that has been up around 90% in last 12 months with a 2% dip witnessed in the last five daysas CEO, Rod Drury has been recently replaced by Steve Vamos (former Microsoft Australia head). The group’s expanding footprint into United Kingdom (with subscribers’ base growth of 54%) and United States (with subscribers’ base growth of 43%) supported by a good first half 2018 performance has been encouraging. The operating revenues surged by 37% with positive EBITDA being reported for the first time in the company’s history as loss narrowed to $21.08 million from $43.92 million in 1H FY17. The investors can stick with XRO while it is inching towards its high levels.

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