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.