Dell Technologies Inc (NYSE: DELL),  The Trade Desk Inc. (NASDAQ: TTD) and Apollo Global Management Inc. (NYSE: APO) represent a diverse group of companies but have something in common: They're large-cap stocks that aren’t part of the S&P 500 but are outperforming the index. 

Contrary to popular belief, S&P 500 stocks aren’t necessarily the largest domestic companies.  

According to S&P Dow Jones Indices, which oversees the index, “The selection process for the S&P 500 is governed by quantitative criteria—including financial viability, public float, adequate liquidity, and company type—that determine whether a security is eligible for inclusion.”

To join the index, a company must have a sizeable enough market capitalization to qualify as a large-cap stock. “It also must have sufficient float, or percentage of shares available for public trading,” says S&P Dow Jones Indices.

Stocks like Dell, The Trade Desk and Apollo may outperform the broad index for several reasons, including:

• Exclusion from the S&P 500 doesn't necessarily reflect inferior fundamentals or growth potential. 
• Being outside the index could mean they're undervalued or underappreciated by investors, presenting buying opportunities. 
• Smaller large-cap stocks may have greater room for growth compared to larger, well-established S&P 500 constituents. 
• Active fund managers seeking excess return beyond what they are getting from the S&P 500 may look beyond the index for outperforming stocks, contributing to potential price appreciation for these large-cap outliers. 

Dell Beating S&P by Wide Margin

The Dell Technologies chart clearly shows the stock’s enormous margin of outperformance versus the S&P 500, and versus other technology stocks in the Technology Select Sector SPDR Fund (NYSEARCA: XLK). 

Dell stock has returned 31.09% in the past month, while the S&P 500 returned 3.15%. 

Dell has a market capitalization of $78.28 billion, easily qualifying it for S&P 500 membership. 

The company has essentially been printing money, with a long track record of profitability. Full-year operating income for 2023 was $5.8 billion. Wall Street expects earnings of $7.56 per share this year, an increase of 6%. 

In 2025, that’s forecast to rise by 13% to $8.57 a share.

The Trade Desk Trading in Volatile Fashion

Online advertising manager The Trade Desk boasts a market capitalization of $39.19 billion and a one-month return of 8.82%. 

The company has grown earnings at double- or triple-digit rates in the past seven quarters, and analysts expect more of the same in 2024 and 2025. 

The Trade Desk chart shows that this is a highly volatile stock, despite its potential for market-beating returns. It has a beta of 1.81, meaning that it’s 81% more volatile than the broader market.

“We expect this demand-side platform provider, which helps ad buyers manage programmatic ad campaigns, will benefit from the ongoing growth of digital advertising spending,” wrote Morningstar analyst Michael Hodel in a March 12 research note.

Hodel considers the stock overvalued, with a fair value estimate of $52; the stock closed at $80.16 on March 13. The Trade Desk analyst forecasts show a consensus view of “moderate buy” with a price target of $88.93, an upside of 10.93%.

Apollo Stock Flying High

Apollo Global Management, with a market capitalization of $62.42 billion, is not yet a component of the S&P 500.

Apollo stock has outpaced the large-cap index, returning 19.67% in the past three months. The Apollo Global Management chart shows the stock correcting in an orderly fashion above its 50-day moving average. Apollo stock is currently in buy range, trading between that average and its prior high of $115.03.  

Apollo has something of an arcane business model: It raises capital for, invests in and manages alternative investment vehicles, including private equity and credit transactions. Wall Street expects Apollo to earn $7.79 a share this year, an increase of 16%. 

CFRA analyst Kenneth Leon, in a March 9 note, said, “We think APO has the right business mix in private credit/fixed income, insurance, and private equity, with less exposure to real estate.” He added that most of the company’s businesses can do well in any interest rate market.  Leon said he sees an opportunity for the company in the insurance and private credit markets.