WHAT ARE BLUE CHIP STOCKS?
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A blue chip
company is a well-known corporation with a long history of growth and
profits. The term "blue chip" generally refers to items of only the
highest possible quality. Stocks of blue chip companies are considered the
most elite stocks on Wall Street.
Blue chip companies are characterized by strong stock prices and
great past earnings. They are large, well-known stocks such as AT&T
and IBM. They have a reputation for excellent management and top-quality
products and services. Blue chip stocks are often the leading stocks of
their particular industries, which is why they are also referred to as
Blue chip stocks are large-capitalization stocks. This
means they have an enormous market value of $5 billion or more. Market
value is determined by multiplying a company's share price by the number of
shares it has on the market. Large-cap stocks make up more than 80 percent
of the stock market's entire value.
Blue chips can weather adverse economic conditions better than
small-cap stocks, because they are well established and have strong market
Now let's look at the risks of investing in blue chip