An Index-Driven Stock Surge?

This year, as every year, the major stock indexes have made a few roster changes. Many index components have simply been shuffled around -- either promoted or demoted to a new index. But despite that seemingly arbitrary movement, these alterations could have big consequences for the stocks involved.

Here are just a handful of the stocks moving up or down the Wall Street ladder:

Source: Standard and Poor's.

Few companies would be proud to get demoted to an index devoted to smaller-cap businesses, and the perceived stigma of the move could drive away investors seeking compelling stocks. On the other hand, moving up from the minors to Wall Street's big leagues suggests that a company has growth -- and perhaps other advantages -- on its side.

New index members get an additional boost as well. When a company is part of an index, every fund based on that index will need to buy shares of the new component, to mimic the index's composition. That kind of demand can boost the share price of the stock.

In the near future, when Warren Buffett's Berkshire Hathaway (NYSE:BRK-B) splits its stock 50 to 1, many Wall Street observers expect that Berkshire will be added to the S&P 500, a major index on which many index funds are based. That could kick its price up a bit.

The most intriguing member of the table above is Visa. It's already rather large, with a market cap in the $60 billion range. Since the S&P 500 is market-cap-weighted, index funds will be buying more shares of Visa than they will of a $5 billion company like Ross Stores, which could mean Visa will see a proportionally bigger jump in its share price.

If any of these stocks start moving or shaking in the next few weeks, their ups or downs may have less to do with their actual performance, and more to do with their new index accommodations.