Why do you call it Blue Chip?

Question

I am interested in buying a stock but not so sure what blue chip means. Does anyone recommend any good blue chip company? Or how does an IPO company become a blue chip? Is Microsoft blue chip?

Answer 1

Blue chip means a well established company with stable earnings and no significant liabilities that usually pays dividends.

The name comes from the fact that blue poker chips are usually the most valuable.

Answer 2

A blue chip stock is the stock of a well-established company having stable earnings and no extensive liabilities. Most blue chip stocks pay regular dividends, even when business is faring worse than usual. They are valued by investors seeking relative safety and stability, though prices per share are usually high. Typically, such stocks are perceived to offer reliable returns, low yield, and low risk. Many blue chips are components of popular indices, such as the Dow Jones Industrial Average and the S&P 500.

Alternately, blue chip stocks are sometimes defined as companies whose stocks have large market capitalization values (for example, over $1 billion.)

The term comes from blue-coloured poker chips, which are typically the most valuable. Examples are Royal Dutch Shell (petroleum), The Coca-Cola Company (food) and IBM (information technology). Before its total collapse in 2001, Enron was considered to be a blue chip stock.

Answer 3

Blue chip comes from poker chips, where the blue is the most valuable. Blue chip stocks are the expensive high-end stocks. Don't know the other answers to your questions - but I would say this - consider mutual funds. They buy lots of stocks from many different sectors, and then you and a thousand other investors each own a part of that large portfolio. It is professionally managed and very stable compared to one individual stock which could go bust next week. The profits are consistent and usually higher than any one stock.

Answer 4

Blue chip refers to well established company with stable earnings. The term derives from blue colored poker chips which are most valuable.
For blue chips companies, do market research on their financial and non financial background, look out for their past performance in terms of market capitalisation, dividend yield, check out their assets and most importantly their liabilities!

Answer 5

The blue chips are the companies that have been around for about a bazillion years, like IBM . . .

http://beginnersinvest.about.com/od/bluechipstocks/Blue_Chip_Stocks.htm

or of course Wiki

http://en.wikipedia.org/wiki/Blue_chip

Answer 6

Yes.