Is it a good idea to invest in blue-chip?
Blue chip stocks are usually less risky and thus considered safer than other stock-based investment options. That's because one of the major determining factors of a blue chip stock is that it must be a well-capitalized company, meaning it should have the financial fortitude to endure an inevitable economic downturn.
These stocks are often seen as a core component of a well-diversified investment portfolio. Blue chip stocks can provide stability and consistency to a portfolio while offering potential long-term growth. They can be an attractive and rewarding option with careful research and a well-considered investment strategy.
Low Risk: As industry leaders with reliable cash flows and long histories of paying their debts, blue chip companies are considered to be low risk.
In most cases, blue-chip stocks are a good investment, but the full answer lies in your personal financial goals, risk tolerance and the overall needs of your investment portfolio. They are stable and reliable and provide benefits such as regular dividend payments, market presence and liquidity.
The best blue-chip stocks demonstrate consistent profitability and steady or growing revenue. They also have an attractive valuation based on fundamental metrics such as P/E ratio, P/B ratio and dividend yield.
| S.No. | Company | Industry/Sector |
|---|---|---|
| 1. | Tata Consultancy Services Ltd | IT - Software |
| 2. | Infosys Ltd | IT - Software |
| 3. | Hindustan Unilever Ltd | FMCG |
| 4. | Reliance Industries Ltd | Refineries |
Long-Term Prospects: Take a long-term approach to investing in Blue Chip stocks. These companies are best suited for investors with a five-year or longer time horizon. Monitoring on a regular basis: Keep a watch on your portfolio, assess company performance, and make any adjustments to your holdings.
Some of the best stocks to invest in 2024 for beginners include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Mastercard Incorporated (NYSE:MA). For this list, we used a stock screener and selected stable companies with high single digit or low-teens revenue growth.
During economic slowdowns, investors turn to blue chip stocks to protect their investments.
| Company | Market Cap (Rs. cr) | P/E Ratio |
|---|---|---|
| Hero MotoCorp | 88,792.8 crores | 27.40 |
| Wipro | 249,400 crores | 21.93 |
| Bajaj Auto | 215,100 crores | 31.40 |
| Adani Ports & Special Economic Zone | 247,700 crores | 39.06 |
What is the average return of blue chips?
| Returns (%) as of 12/31/2023 | QTD | 1 YR |
|---|---|---|
| Blue Chip - Gross | 10.17 | 24.44 |
| Blue Chip - Net | 9.76 | 22.59 |
| Russell 1000® | 11.96 | 26.52 |
| Returns for greater than one year are annualized | ||
At the same time, blue-chip stocks can deliver healthy capital gains. As a small example, Costco Wholesale (NASDAQ:COST) has trended higher by 226% (capital gains) in the last five years. This has led to this list of blue-chip stocks under $20.
Some examples of blue chip stocks are Coca Cola, Apple, IBM, American Express, McDonalds, DuPont, and American Express.
Amazon joins 29 other 'blue chip' companies in the Dow Jones Industrial Average. Amazon.com Inc. is joining the ranks of one of Wall Street's oldest and most exclusive stock indexes: The Dow Jones Industrial Average.
For now at least, analysts are anticipating S&P 500 earnings growth will continue to accelerate in the first half of 2024. Analysts project S&P 500 earnings will grow 3.9% year-over-year in the first quarter and another 9% in the second quarter.
The problem is that despite being included in blue chip ETF indexes, companies like Nvidia and Tesla aren't truly blue chip stocks, George Pearkes, an analyst at Bespoke, told CNN. They're much more volatile. Tesla, for example, is down about 23% so far this year.
| STOCK | ACTION | TRADE PRICE |
|---|---|---|
| INDHOTEL | BUY | 569 |
| NATCOPHARM | BUY | 958 |
| MOTHERSON | BUY | 117 |
| BSOFT | BUY | 745 |
| Company | Ticker symbol |
|---|---|
| Diamondback Energy | FANG |
| Delta Air Lines | DAL |
| Thermo Fisher Scientific | TMO |
| Discover Financial Services | DFS |
- Reliance Industries Limited (RIL): Sector: Conglomerate. ...
- HDFC Bank Limited: Sector: Banking and Finance. ...
- Infosys Limited: ...
- Titan Company Limited: ...
- Larsen & Toubro Limited (L&T): ...
- Asian Paints Limited: ...
- TCS (Tata Consultancy Services) Limited: ...
- Bajaj Finance Limited:
And the real benefit to these stocks is that they pay a dividend which increases your total return. Over time, a strong total return is the key to building wealth. Here are seven high-yield blue-chip stocks to help you meet your retirement goals no matter where you are on your investment journey.
What are the positives negatives of buying a blue-chip stock?
Although blue-chip stocks are generally considered a safe investment, there are still risks involved. The value of the stock can still fluctuate based on market conditions, and there is always the risk of a company experiencing financial difficulties or unexpected events that can negatively impact its stock price.
You can purchase blue-chip stocks through online brokerage firms or gain access to them through blue-chip funds. Given the high price-tag per share for some blue-chip stocks, some investors are opting to buy into these companies through fractional trading offerings.
| Stock | Market Capitalization | Sector |
|---|---|---|
| Colgate-Palmolive Co. (CL) | $73 billion | Consumer staples |
| Sysco Corp. (SYY) | $41 billion | Consumer staples |
| Coca-Cola Co. (KO) | $261 billion | Consumer staples |
| S&P Global Inc. (SPGI) | $134 billion | Financials |
But if you have a long enough investment time horizon and pick the right investment, $1,000 could eventually grow into $1 million. Buying stocks like Amazon, Home Depot, Microsoft, and Berkshire Hathaway at the right time has all delivered such returns to early investors.
Amazon's analyst rating consensus is a Strong Buy. This is based on the ratings of 41 Wall Streets Analysts.
