You must have come across articles that define some companies as blue-chip companies. But very few people know what blue-chip companies are. Do you know what a blue-chip company is? If not, you have stumbled upon the perfect article. In this article, we will delve into what a blue-chip company is. Also, let’s know Blue Chip Meaning.
This article is an attempt to acquaint you with the meaning of blue-chip and what are the companies which can be taken under the ambit of being blue-chip. In addition to this, the article will also acquaint you with the companies which are called blue-chip companies and the characteristics of a blue-chip company. Before you know what a blue-chip company is, you need to know the meaning of the word blue-chip.
Blue-chip: What word is this?
Blue-chip as a word means something of high quality. The word blue-chip is used mostly to describe the companies that are well organized, profitable, and successful in business. These are the companies in which the investors are ready to invest. They are the top companies that are the most influential in the market.
In short, the profitable and influential companies in the market are considered blue-chip companies.
The word blue-chip: History in brief
The word blue-chip first came into use in 1923. It described those stocks which had high prices. The word blue-chip referred to high-value stocks in the past. But today, this word is prominently used to describe the companies having high market value or the shares having high value. The word blue-chip was taken from the poker world, where it was used to describe high-value stocks.
Blue-chip companies: What are they?
By now, you must have gotten a rough idea of what a blue-chip company is. A blue-chip company is a multinational firm that is mature and influential in the market. Investors do not think twice before investing in blue-chip companies. Blue-chip companies are seen as reliable and profitable because they have persisted in the market for a long tenure. They have created a firm base in the market for their respective industries.
Blue-chip companies enjoy a high reputation globally. They are multinational firms that have been able to create a strong base in the global market. The most reliable of all the companies in the market, blue-chip companies are known for selling high-quality goods and services. The customers are satisfied with the services of these companies. And consumer satisfaction is one of the reasons behind its success.
The blue-chip companies are known for having a long history of financial success. It is the reason why investors do not think twice before investing in these companies. They believe that the company will give them profitable returns. And it is obvious because of the prevalence of blue-chip companies in the market. The blue-chip companies assure of giving profitable returns. Their shares have mostly high values. The fair well even when the rest of the market is in ruins. These are the companies that hardly face any low phase. They are always making profits in the market.
The following are the takeaways from the above section of the article:
- The blue-chip companies are those which are matured corporations that make profits in the market.
- These companies have a firm base in the market and are influential on the global medal.
- These companies are prominent for the acceptance they get in the market and society.
- These companies assure you profitable returns.
- Investors do not hesitate before investing in these companies.
- They perform well even when the economic conditions are not in their favor.
Some traits of blue-chip companies
All the blue-chip companies have some things in common. Some of their traits are as follows:
- Popular
Blue-chip companies are the most popular companies within their industry. A perfect example of this can be Walmart which is the leading company when it comes to retail stores. And its popularity is not only confined to the United States but extends to many countries around the world. So, blue-chip companies are popular companies in the market. A reason behind their popularity is the quality of products and services it provides.
- Profitable
The probability of a blue-chip company making profits is very high. Its profitability is one of the reasons why investors do not hesitate to invest their money in it. The companies assure to make profits. They have been in the market for a long time and have a history of making profits.
- Assured returns
The blue-chip companies are profitable. And hence, assure returns to the investors. It is obvious that if a company is profitable, the investors will get good returns by investing in it. Investors do not think twice before investing in these companies because of their trait of assured returns.
- Well-established
The blue-chip companies are well established. They have been prevalent in the market for a considerable period. Since the companies have been there in the market for a long time so they are well-established. Even if the economic conditions are not in the favor of the company, they remain intact. They do not face losses or perish like other companies. They can bear the adverse effects of the economic conditions. These companies have a firm base all over the world and can be counted as being well established. It is not only prevalent in the domestic market but also makes its impact on the global market.
- Stability
The blue-chip companies are credited with being stable companies. Due to the profits they make and the position they hold in the market, these companies are stable. If any external factor bothers these companies, they are capable of combating it. Since these companies are lauded for being stable the investors do not hesitate from investing in them.
- Well-capitalized
These blue-chip companies have significant market value. It means that they are well-capitalized. They make enough profits to increase their market value every year. These companies make profits equivalent to a billion dollars every year. These companies make a profit regularly and break their records. For example, Apple can be considered as a well-capitalized company as its profits have increased with the passing years
- Organizational structure
Blue-chip companies are successful companies that earn profits. The organizational structure of these companies can be credited for their success. These companies follow different organizational structures but their strategies have been successful.
- Offering quality products
The blue-chip companies are successful because of their customers. Since the customers are loyal to these companies, the base keeps on increasing. The quality of the products keeps the customer base intact for these blue-chip companies. Every customer would prefer good and high-quality goods. These companies facilitate their customers with high-quality products and services.
- Products and services might be expensive
The products and services offered by blue-chip companies might be expensive as compared to those provided by other companies. The reason behind products and services being expensive is that these companies do not have any competition in the market. They are on the level which hardly any company could match. Since these companies are toppers in their respective industries they can afford to keep the prices high. And even after keeping the products and services expensive, these companies make huge profits.
These companies are successful in fulfilling their mission and vision because of the traits that are elaborated in the above section.
Some blue-chip companies
There are many blue-chip companies in the world. They have made profits and have established themselves in the global market. Some of these companies are as follows:
- Coca-Cola
Everybody knows about this company. Coca-cola has made itself a blue-chip company in the beverage industry. It has been successful in creating a significant base of customers throughout the world. The net worth of this company is $87.6 billion as of the year 2021. It possesses all the characteristics of a blue-chip company.
- Apple
Apple is a leading company in consumer electronics. It has been successful in forming a large customer base worldwide. The company has a net worth of $2.4 trillion per year. The company’s huge market size shows that it is well-capitalized. Apple is a name that is prevalent in the market for a very long time. It is a well-established company. Even though its products are expensive yet its profits do not decrease. It just keeps on increasing.
- Microsoft
Microsoft is credited with providing people with high-quality computer software and consumer electronics. Another multinational company from America, Microsoft has a net worth of $2 trillion. The company is successful in facilitating its customers with high-quality products and services. The company is mostly in profits and thus allures many investors and stock buyers.
- Walmart
Walmart leads the way when it comes to retail store chains. Walmart has a huge base of customers. There are more than 4700 stores of Walmart alone in the United States. The company can be seen evolving with the dynamic times. It can adapt itself to the change. The net worth of this blue-chip company is $386.83 billion. This company has all the characteristics that a blue-chip company should have.
These were some of the companies that can be taken under the ambit of being blue-chip companies. These companies are found reliable and profitable by the investors to invest in. This is the reason why these companies allure investors from all around the world.
Blue-chip stocks: What are they?
Now that you know about the blue-chip companies, there is more term that you should be acquainted with. This term is blue-chip stocks. As the name suggests these are high-value stocks. Or in simple words, these are the shares of the blue-chip companies in the stock market. The investors or people buy these shares confidently. The reason behind this is the profitability of these companies. Probability of getting better returns increases. So, these companies enjoy many investors.
So, blue-chip stocks are shares that have a high value. The shares of companies like Apple, Walmart, Microsoft, etc can be considered as blue-chip stocks.
So, next time you hear the word blue-chip companies or blue-chip stocks, you should not get confused about what either of them means.
Conclusion
There exist some companies which make huge profits in the market. These companies are called blue-chip companies. The article began with elaborating upon the meaning of the work blue-chip. It proceeded on to elucidate upon the blue-chip companies and then their characteristics. Many companies around the world can be taken under the ambit of being blue-chip companies. The article mentioned a few of them like Apple, Microsoft, Coca-cola, etc.
The one thing you can notice here is that all these companies are popular and everyone knows what they are.
The article also elucidated upon what is blue-chip stock. These are shares of the blue-chip companies.
To summarize, blue-chip companies are those which make profits, are well established, have a wide base of customers, and allures investors.
Frequently Asked Questions (FAQs)
What does it mean by blue-chip?
The word blue-chip equates to something of high value. It is mostly used to describe the companies that make huge profits and are influential in the global market. The word blue-chip is what we use to describe the shares in the stock market having high values.
What are some of the characteristics of blue-chip companies?
The blue-chip companies have some traits in common. These companies are popular, can afford to keep the price of their products and services expensive. These companies are well-established, profitable, assure returns, and attract investors. These companies are lauded for having a significant market value and influence in the global market.
What are some of the prominent blue-chip companies in the world?
There are many blue-chip companies in the world. Some of them are Microsoft, Coca-cola, Walmart, Apple, Walmart, Walt Disney, and many more.
What does it mean when someone says that he is buying blue-chip stocks?
The shares having high value in the market are known as blue-chip stocks. They can also be described as the shares of the blue-chip companies like Apple, Walmart, etc. People buy these shares because profitable returns are guaranteed in this case.
