Uncapped 100 stocks tipped for promotion

Three Uncapped stocks are among JP Morgan's selection for stocks that could make it into the S&P/ASX200 – a factor which could lead them to outperform in the future.

Uncapped 100 stars STW Communications (SGN), Credit Corp Group (CCP) and Forge Group (FGE) may break into Australia's top 200 companies index at the expense of the embattled miners and mining related industries, according to JP Morgan.

The Uncapped heavyweights make up three of the seven that the broker thinks the S&P/ASX could bring into the index. Among the selection STW is a "high" conviction call, while Forge Group is rated a "medium" chance and Credit Corp Group a "low".

Other companies JP Morgan thinks have a high probability are Cromwell Property (CMW) and Sky Network TV (SKT). 

As Brendon Lau highlighted in Three small caps morphing into market leaders, there is empirical evidence to suggest that stocks outperform the wider market in the months following their promotion into an index.

The companies tipped to make way for these up-and-comers include heavy earthmoving equipment leaser Emeco Holdings (EHL) and engineering contractor Decmil Group (DCG), which have seen their share prices plummet in the face of the mining services disaster. Miners Discovery Metals (DML), Mineral Deposits (MDL) and Alacer Gold Corp (AQG) could also be given the boot.

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