What Is A Blue-Chip Stock?
No, we are not talking about casino chips here.
(Ok, there are no blue chips in the gif, but you get my drift…)
What we are referring to are blue-chip stocks.
A blue-chip stock is something that’s generally well-recognised and has strong financial stability.
Blue-chip companies are considered to be the best of the lot, just like a casino’s highest valued chips, which are blue.
Since blue-chip stocks are perceived to be of quality, they are rarely sold cheaply.
In Singapore, all the 30 stocks that belong to the Straits Times Index are considered blue-chip stocks.
Some of the 30 stocks are well-known names such as:
- Oversea-Chinese Banking Corp (OCBC)
- United Overseas Bank (UOB)
- Singapore Telecommunications (Singtel)
- ST Engineering
- Genting Singapore
- Singapore Airlines
- Singapore Press Holdings (SPH)
One thing to note is that blue-chip stocks are not sure-win investments, as it’s often thought to be. Investors still have to assess the fundamentals of the company before investing in them.
Also, blue-chip companies don’t always remain a blue chip. The components of the Straits Times Index are frequently reviewed and some do drop out if they don’t meet the eligibility criteria.
In the US, familiar blue-chip companies include Apple, Coca-Cola, Microsoft, McDonald’s, and Walt Disney. They form part of the Dow Jones Industrial Average, a US stock market index which also contains 30 stocks.