Blue-chip stocks are those issued from companies that are rock solid, or seemingly have little risk. These are companies that have been tried and are true. They’ve met all the requirements and have a track record that is enviable. What are some of these companies?
Walmart, Pepsi-Cola, Coca-Cola, Chase, Kroger. Apple, Verizon, MacDonald’s, and those green companies that are newer, but for reasons understandable are ones that will improve in standing as the environmental crisis is solved.
Of course no company can last forever, even the best ones eventually fold when their products are no longer in demand. The rock solid companies that address the problems of society are those that are deemed more acceptable and are on the blue chip list. As an example, General Mills is an old standby company that keeps reinventing itself in order to keep up with what the public demands.
As to explain the above statement, it has to do with the way this company has addressed the gluten-free needs of newly diagnosed gluten intolerant people. Less than a year ago they came out with four different brands of gluten-free cereal especially designed for Celiac and gluten intolerant sufferers. This is only one example of how they meet the demands of the public.
On the other hand, the soft drink companies will have to do some fast thinking if the public demand for their product lessens. They’ve been satisfying the needs of the thirsty public for many years, but if the medical community is now on their trail because of the obesity epidemic. Much of which is blamed on over consumption of soft drinks with their excessive sugar content; plain water is what is needed and that adds no extra calories. Of course these companies with their business expertise will find ways of continuing on in their amazing success as blue-chip companies.
Blue-chips are named for poker chips, according to an online source. ”Since blue chips used in the game of poker are of the highest value, it makes sense that stocks with the greatest potential for value would also be called blue chips.” And in trading in such huge amounts in with such a gamble involved, it is easy to understand the labeling.
Blue-chip stocks make up the market index of the Dow Jones industrial average that is used as a leveraging agent for other stocks. In more recent times technology stocks are the up-and-coming business investments, more lucrative of these are Apple Incorporated with their popular iPhones, and right next to them the right is Verizon with their wireless technologies. Other companies on the blue-chip list are United Health, General Electric and many other companies dealing in health insurance, pharmaceuticals, and energy.
Not all companies sell blue-chip stocks, also referred to as bellwether issues, since most companies cannot meet their requirements. In in addition to having been a long proven record of service dividend increases, uninterrupted payments to stockholders, diversity, geographic distribution, competitive advantages such as “franchise value, distribution control, and cost efficiency”, they must be ever vigilant about supplying the public with their products in meeting the most stringent tests of durability. When these fail their status is lowered and that means all the perks that go along with their former prominence as a viable business is also diminished.