McCormick added to S&P 500 index

16 million shares traded as stock gains 46 cents

March 21, 2003|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

More than 16 million shares of McCormick & Co. Inc.'s stock changed hands yesterday after the company and Standard & Poor's announced that the spice maker would become a part of the S&P 500 index.

The stock, which joined the index after yesterday's closing bell, typically trades between 300,000 and 500,000 shares a day. It was among the 10 most active stocks on the New York Stock Exchange yesterday.

Shares rose 46 cents, or 1.83 percent, to close at $25.58.

The Sparks-based company, which was previously on the S&P MidCap 400 Index, called the change a milestone. Robert J. Lawless, McCormick's chairman, president and chief executive officer, said it could open the spice maker up to international investment and greater recognition. It could also mean higher stock prices, he said.

"For the employee base, it's just tremendous," Lawless said. "For me, it's just tremendous recognition by the S&P of the performance we've had over the last five years, meeting the criteria that have allowed us to move up from the S&P MidCap to the S&P 500."

Ann Gurkin, a food analyst for Davenport & Co. in Richmond, Va., said McCormick is generating strong results and warrants greater exposure, which it will get on the S&P 500 Index.

"It's certainly very much a positive that they'll be included in the index," Gurkin said.

McCormick's shares now must be added to mutual funds that are indexed to the S&P 500. Additionally, some funds can include only stocks that meet certain criteria such as being listed on the S&P 500.

McCormick replaces HealthSouth Corp., the troubled Alabama-based company that provides outpatient surgery and other health care services.

The S&P 500 is composed of the stocks of 500 top companies in leading industries that reflect the U.S. economy.

"It's designed to have a mirror image of the U.S. market," said Lynn Cohn, a spokeswoman for Standard and Poor's index services in New York.

To decide what companies should be listed on the S&P 500, several factors are taken into account, including liquidity, earnings history and market capitalization of the company, Cohn said.

Michael Kress, an analyst for Pershing LLC, a brokerage firm in New Jersey, favors McCormick and said the public might view it more positively now.

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