IQ 100

The CNBC index that finds hidden value in stocks

Valuing intellectual property

If you want a look behind the curtain to find the most innovative companies in the marketplace, one measure is CNBC's IQ 100 Index, a first-of-its-kind rules-based index of large-cap companies that derive substantial revenue growth through the use of protected, proprietary technology.

It was revealed Tuesday that effective January 1 the index was rebalanced, and 10 new companies made the cut, including Target and Nabors Industries.

In the past year, the index has significantly outperformed the S&P 500: It is up 35.73 percent versus 21.46 percent for the S&P 500.

The companies in the index are weighted according to each one's ability to invest in, develop, control and deploy intellectual property to achieve strategic advantage over competitors. Companies with the highest weighting maintain this type of advantage across multiple industries. It is powered by MCAM-International, a firm that maintains an unprecedented archive of documents related to patents, trademarks, copyrights and other intangible assets from 160 countries.

According to David Martin, M-Cam founder and chairman, Target has become a leader in cybersecurity after suffering losses from its hacking debacle in 2013. It is now "best-of-breed in cyberdefense" from the point-of-sale throughout the retail value chain.

Nabors' technology in "smart hole" horizontal drilling made it a standout in the energy fracking sector, Martin explained. "It is enabling exploration for resources in places never before possible."

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The No. 1 company on the index is Microsoft, for its leadership in developing software for the cloud, but surprisingly other tech darlings are absent, including Google and Snap. As Martin notes, "Snap has a beautiful interactive platform for consumers, but it does not have core technology."