What is a Blue Chip Company: Stocks, Meaning, Advantages, Characteristics
The idea of Blue Chip was framed by Oliver Gingold, where he used it as an illustration of stocks which had surged prices designated to them, probably at price $200 and above. The fashion went on and the concept emerged where Blue Chip Companies came into the frame.
The prior reference was in relationship with the high prices of stock, but, in recent times the widespread frequent usage of the term has led to its usage being tilted towards high quality stock as well.
So, the Blue Chip Stocks are the ones designated to be the high quality stocks.
What is a Blue Chip Company or Blue Chip Stock or Blue Chip Share?
Categorizing stocks based on a number of groups is commonly found. Examples of which are related to the market cap group such ad small, mid and large cap and among other combinations.
Blue Chip Company stocks are however, mostly trending speaking from the point of view of beginner traders and also the pros.
The mere reference of Blue Chip Share, is in relation with the company shares, which have like forever displayed a consistency in performance among various other aspects.
Such stocks are generally immune to market volatility as they are mostly either debt free or have a pretty low debt ratio.
Top 10 Blue Chip Companies in India – Best Blue Chip Companies
Industry leaders are generally the blue chip companies, and we can already assume the obvious here.
Before you start with the assumption of the Best Blue Chip Companies, we wish to lend a hand and let you know of the Top 10 Blue Chip Companies.
Rank
Companies
1
ITC
2
HDFC Bank
3
Infosys
4
HUL
5
Nestle India
6
Eicher Motors
7
Reliance Industries
8
Asian Paints
9
TCS
10
Bajaj Auto
What types of Stocks are known as Blue Chip Stocks?
Certain characteristics possessing stock are termed as Blue Chip Stocks. Of all the high number of favorable traits you can find in a blue chip company stocks, you can definitely find the below mentioned ones.
Well established and reputed company’s stocks are considered to be blue chip stocks.
Their products or services from the domain they deal are greatly in use by a high number of individuals.
Market listing of such shares is dated long back.
With all the effects that could have weighed them down, they stood by them all and are still going strong enough.
The financial statements such as the balance sheet and the income statement are always strong, and reflect the strong financial position of the company.
Growth rate in present in the company, and most probably a stable past track record is witnessed.
Are Blue Chip Shares good for investment?
Market recession, inflation and economic downtown are generally the factors investors are concerned about, and the Blue Chip Shares are safeguarded from all the same. Fair enough to be considered good for investment.
Also, they are denoted to yield stable and constant returns, while maintaining a fair debt to equity ratio.
Other likewise ratios, such as ROE, PE, etc are as well concerned to be stable along the period. The dividend payout is as well constant and regular, making it a safe bet for the investors, with regular returns.
Other traits which can be found in the blue stock companies are a strong financial hold, great balance sheet, constant witnessed growth ratio, and efficient management.
Being the established companies they are, it definitely makes them liable to be termed good for investment.
What are the Characteristics of Blue Chip Companies?
We have enlisted some of the characteristics of Blue Chip Companies already in the above context, while we wish to pinpoint the precise financial characteristics now.
The fundamentally strong companies make up the list, where they have high market capitalization. A rule of thumb for Blue Chip Stocks exist, where they have above Rs.20,000 crores market cap.
Performance of such companies is recorded to be stable and have a stable and growing past performance.
Such companies are not debt ridden, rather have a low debt ratio
Shareholders who stick by them, are always rewarded with a stable dividend
Blue Chip Companies or Blue Chip Stocks – Conclusion
Investors, who are long term investment oriented, often go for the stocks of Blue Chip Companies. It is generally associated with the factor of low risk and high long term returns.
It is because of the long term stable financial background of the companies, which makes it immune to loss or failure.
Though this mere assumption is not a fact, or is deemed to be true all the times. It is with the belief that, they have everything composed and capable of withstanding any diverse or negative market conditions.
The Blue Chip Stocks has a tag of expectations where the investors assume them to stay stable, and contribute higher returns.
Blue Chip Stocks FAQs
Ques – Who are called blue chip companies or Blue chip stocks?
Answer – Stocks are categorised based on number of factors in groups. Blue-chip company stocks are usually those that are trending when beginner traders as well as pros are concerned. The reference to this is in relation with the company shares that have, for times immemorial, shown a consistency in performance.
Ques – Where can I find top 10 blue chip companies in India?
Answer – In this very article provided on our website, we have provided you with a list of 10 blue-chip companies in India that top the list. You can check them all and decide upon your investment strategies accordingly.
Ques – What type of stocks are known as Blue chip stocks?
Answer – Basically, the blue-chip stocks are those that are designated to be the high-quality stocks among all. Earlier it was in the reference to the price, but currently its usage has been linked towards the high-quality stock all in all.
Ques – Is it wise to invest in Blue chip stocks?
Answer – Blue-chip stocks are usually pretty neutral to market volatility. Having said this, they are either always free of debt or have an insanely less debt ratio. So, it is indeed a wise option to invest in blue-chip stocks.
Ques – What are the features of Blue-chip stocks / companies?
Performance of blue-chip companies have been known to be pretty stable and quick.
Such companies have a tremendously less debt ratio.
These companies have an increasingly valued market capitalisation.
Ques – Are Blue chip stocks good for long or short-term Investments?
Answer – Whichever investor is interested in a long-term investment, often choose the stocks of blue-chip companies. This is because it is associated with a very low risk factor and it makes sure you get higher returns throughout. It has a long-term stability as far as financial grounds are concerned and thus it makes itself viable to be chosen first.
Ques – What are the Risks involved in Blue chip stocks?
Since a blue-chip stock is a large stable company, the capacity for beating the market is a little slim.
It has bigger downside risk all along.
It has a moderate growth prospect.
They focus on dividends.
Ques – Who can invest in blue chip stocks?
Answer – Blue-chip stocks have an unusually certified Balance sheet, and history of increasing dividends. For this reason investors usually consider blue-chip stocks to be the most secure. Having said that, absolutely anyone can invest in blue-chip stocks.
Ques – Do we get higher returns investing in Blue chip stock?
Answer – These companies are famous for providing their shareholders with increasing dividends and subsequently higher return ratio both when it comes to equity as well as capital. They have immensely less market risk, high interest coverage and possesses the ability to generate a lot of cash.
Ques – Where can I check the performance of Blue chip stocks?
Answer – In this article we have provided you a chart with the fund name, the assets under management and a three-year return cost which shows you very vividly, the various performances of the blue chip stocks, in its entirety.
