Blue Chip Companies – Definition, Top 10 Stocks, Benefits, Characteristics & more

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.

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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 Companies

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.


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    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.

    RankCompanies
    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.


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