Blue-Chip Stocks: Definition, Risks, Examples
Please note that the stocks above were selected by an experienced financial analyst, but they may not be right for your portfolio. Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance. The second-largest investment bank in the world by revenue, Goldman Sachs stock fell 10.2% in 2022 as the Federal Reserve tightened monetary policy amid rampant inflation. However, KO’s average return over the past decade is the worst on this list. Looking forward, the company is trading at a P/E ratio that is toward the top of its five-year range, meaning it does not stand out from a valuation perspective.
- These stocks allow investors to buy shares in stable companies that have a large market capitalization.
- They represent the crème de la crème of equities — the biggest, richest companies.
- Over the past five fiscal years, Costco grew its revenue from membership fees by 34%, from $2.64 billion in 2016 to $3.54 billion in 2020.
- However, the “price” that investors pay for that stability is muted (but not nonexistent) organic growth.
- At the same time, Altria is aggressively exploring smokeless alternatives.
The fund invests in 260 large U.S. companies that are still growing rapidly. The fund charges just 0.04% a year in fees and manages $153 billion in customer funds. Almost half of the fund’s assets are allocated to technology stocks (Apple, Microsoft, Alphabet, and others). While these businesses have better odds of expanding over time, their stock prices tend to fluctuate in value much more than the overall market. This makes it one of the more volatile blue chip ETFs on this list.
The company operates in business verticals, including motorcycles, commercial vehicles, and personal utility vehicles. Across the pond, the New Europe Blue Chip Index tracks 30 of the top stocks traded on the Continent. The DAX Index tracks the top 30 companies on the Frankfurt Stock Exchange. The name “blue chip” comes from the game of poker in which the trade interceptor app review and how to work with the application blue chips have the highest value. A blue chip company can be a multinational firm that has operated successfully for a number of years, is a dominant leader in its industry, and is widely recognized. Blue chip companies operate profitably despite adverse economic conditions, which helps to contribute to their long records of stable and reliable growth.
This trend aligns with observations made by David Kostin, Chief US Equity Strategist at Goldman Sachs. Kostin points out that stocks have shown a strong return on equity (ROE) over the past several decades, reflecting a positive combination of profitability and efficiency. However, these prosperous times may be coming to an end as higher interest rates start impacting corporate activities. Blue-chip stocks are established, financially strong, and consistently profitable publicly traded companies. Blue chip stocks are stocks of large, well-known, and widely respected companies. Most of these companies pay dividends and have many decades of profitable operation under their belts.
Dolly Khanna Portfolio of Stocks in 2023 – Net Worth, Latest Small Cap Bets, Blog, and Personal Details
For this article we defined blue chip companies as ones with over $10 billion market cap, significant market share in their respective industries and strong fundamentals forex fx definition, uses, & examples and reputation. Blue chip stocks are large, well-established, and well-known businesses. In difficult economic times, many investors favor blue chip companies.
Because of their lower risk, more established company, and consistent performance, these are considered ideal for most portfolios. Even large companies can still put up above-average sales growth rates. If blue chip company growth is what you’re looking for, then the Vanguard Growth ETF is a top-notch option. The first step in choosing an ETF is deciding what you need your portfolio to accomplish. For many investors, that starts with getting growth and income from broad-based stock market exposure.
Because these companies are relatively well-established in the NFT space, they are considered less risky than some of their upstart competitors. However, because digital assets represent a new and risky market, it may be a stretch to apply the blue chip label to such a speculative asset. One thing these big names have in common is cost efficiency, which can lead to strong earnings growth and distribution.
What is the difference between blue chip stocks and penny stocks?
The U.S. plays host to more blue chip companies than any other country. Apple, Berkshire Hathaway, Coca-Cola, Johnson & Johnson, and American Express are all blue chip stocks with operations primarily based in the U.S. Another way for investors to gain exposure to blue chip stocks is through an index fund that benchmarks the Dow Jones Industrial Average (DJIA). And speaking of ETFs, another benefit of blue chip stocks is that investors can find an ETF that specializes in blue chip stocks. This is a great option for investors who don’t want to purchase individual stocks or simply want a more set it and forget it option for this percentage of their portfolio.
Is it good to buy blue chip stocks in India?
Investors can also buy mutual funds and ETFs that specifically target blue chip companies, giving them exposure to an entire basket of blue chip stocks with a single investment. Most asset managers, including Fidelity and BlackRock, offer one or more blue chip-focused funds. Investors can buy individual blue chip stocks through a broker.
The whole world is filled with top brands, and it’s possible to invest in them as well. The fund is composed of more than 800 large company stocks located outside of the U.S. and Canada. Blue chips and dividends commingle to create potentially lucrative opportunities for investors who prefer lower-risk investments. We ranked the 12 stocks based on the number of hedge funds in our database that owned shares of the same stock at the end of Q3. In this article, we take a look at 12 blue chip stocks to buy that are down over 30% YTD. If you want to see more blue chip stocks to buy that are down over 30% YTD, go directly to 5 Blue Chip Stocks to Buy That Are Down Over 30% YTD.
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As long as this keeps moving higher, COST stock will keep moving higher. Gordon Scott has been an active investor and technical analyst or 20+ years. Wedbush Securities analyst Dan Ives says he thinks the iPhone will push AAPL stock up to $240 per share over the next 12 months. “While it’s far too early to call the cycle, these data points are encouraging,” Morgan Stanley analysts said. Pre-orders of Apple’s new iPhone 15 are strong, particularly in the massive China market.
They hope blue chip stocks will generate investment gains with more stable prices and dividend payments, avoiding the volatility of smaller and more speculative stocks. Common examples of blue chip stocks are market leaders like IBM, Coca-Cola, and McDonald’s. These are companies with a long track record of steady growth and low volatility, suggesting microsoft azure vs cloudmqtt that they are unlikely to face major problems in the near future. Blue chips are characterized by a high credit rating, large market capitalization, a listing on the NYSE or another major stock exchange, and are often listed in a major stock market index. Conversely, more conservative investors need not stick to fixed income, low growth assets.