WHAT ARE BLUE CHIP STOCKS : Best Blue Chip stocks in India.
These are the stocks of large and well-recognized companies with a well established financial performance. These stocks are capable of enduring tough market conditions. As these stocks are mostly of the market share holders in their industries, they are of high-cost. In other words we can consider a a (blue-chip) stock as a good company with an excellent reputation and growth.
In general those companies will be Large, well-established and financially sound. Blue-chip will be having remarkable earnings and mostly they used to pay dividends to its investors. But at the same time, there are few companies in this category but not paying dividends to investors. Most of the Blue-chip companies will be having huge Market capitalization mostly in the billions and would generally be the market leader in it’s sector. For all these reasons the so called “Blue-Chip” stocks are among the most popular to buy (among investors).
In 1923, Oliver Gingold, a worker at Dow Jones invented the term ‘Blue Chip’. Once in a brokerage firm, he noticed that various stocks got traded at $200 or more. He then called them ‘Blue Chip stocks’ and published an article about them. Ever since, this term indicates high-priced stocks. Currently, these stocks also refer to high-quality shares. These companies usually provide higher returns in the long run.
These are several factors that recognize a stock as blue chip:
- Long-term annual revenue
- Debt-to-equity ratio(D/E)
- Return on equity(ROE)
- Interest coverage ratio
- Price-to-earnings ratio(P/E)
- Market capitalization
Some of India’s leading Blue Chip companies include State Bank of India, Tata Consultancy Services, Reliance Industries, ITC, GAIL, ICICI Bank, Bharti Airtel, Coal India, HDFC Bank, Sun Pharma, ONGC and Infosys.
In conclusion, blue chip stocks are large companies with well-established finance structure.