What is Blue Chip? Notes when investing in Blue Chip stocks

What is Blue Chip Stock? If you are looking for a type of stock that is always in a stable trend, issued by a company with a large capitalization, then Blue Chip will definitely be the perfect choice for you. This is one of the types of stocks that can bring extremely high profits to players in the stock market. Join Traderforex to learn more about this type of stock and things to keep in mind when using it.

What are Blue Chip Stocks?

Blue chip stocks are a type of stock officially issued by large-cap companies that have significant influence and a leading reputation in the financial market. These companies tend to become “big players” at the top of a specific industry.

The stocks issued by these industry leaders currently provide better returns to investors, even when facing changes, downturns, or unexpected fluctuations in the stock market.

Blue chip stocks are expected to continue growing more steadily compared to other common stocks. The term “Blue Chip” comes from the highest-value chips used in poker games at casinos. The word “blue” refers to the color, and “chip” refers to a token used to exchange money. The blue-colored chips have the highest value in poker. Therefore, the term “Blue Chip” is often used to describe high-quality stocks issued by large, reputable companies.

Conditions to Become a Blue Chip Stock

For a company’s stocks to be considered Blue Chip, they must meet the following conditions: The company issuing Blue Chip stocks should have a long history and a strong financial performance.

Typically, this company is a market leader in a specific sector. The company’s market capitalization is large, and its operational scale and value are usually at least between 5 billion to 10 billion USD. The stock’s growth history must always be sustainable from the point of issuance to the time of sale. Market indicators used to rank Blue Chip stocks must include results in the Standard and Poor’s 500 index (S&P Global Ratings), the Dow Jones Industrial Average, and the Nasdaq 100.

Characteristics of Blue Chip Stocks

As mentioned above, Blue Chip stocks are the shares of leading organizations in the economic sector. Therefore, Blue Chip stocks will possess all the typical and extremely outstanding characteristics compared to other types of stocks, specifically:

• The company has strong financial potential, with substantial financial resources and low debt levels, such as a high credit rating, making the risk of bankruptcy unlikely. Therefore, your Blue Chip stocks are highly secure.
• Investors in Blue Chip stocks can rest assured about the safety of their investments, earning profits without fearing the loss of capital.
• Blue Chip stocks often provide investors with stable cash flow because, in general, their business models are highly sustainable, with low volatility and minimal market influence.
• Companies issuing Blue Chip stocks are usually managed by top financial experts with the best experience and skills. As a result, they help the organization develop and maintain long-term business growth.

Advantages, Disadvantages, and Safety of Blue Chip Stocks

Let’s take a closer look at the advantages and disadvantages of Blue Chip stocks when using them. By understanding these, you’ll gain a clearer understanding of how to effectively use and apply these stocks.

Advantages

As mentioned above, Blue Chip stocks are usually issued by large companies, so even in the face of financial crises or severe economic downturns, they still offer a high level of safety. The profits investors receive are sustainable and consistently stable.

Disadvantages

Although Blue Chip stocks show long-term growth, their rate of increase is relatively slow. Due to their high integrity, the profits tend to be lower compared to other stocks. Fairly speaking, investors’ interest in trading Blue Chip stocks is quite low.

Safety

The certainty of the exchange rate is quite high: Most companies authorized to issue Blue Chip stocks in the market are organizations with extremely strong financial potential and high credit ratings. It can be said that the failure rate of these entities is very low, even nonexistent, allowing traders to confidently invest with the hope of earning substantial profits from the value of the Blue Chip stocks.

According to many well-known financial surveys conducted worldwide, it has been shown that Blue Chip stocks have an extremely high survival rate, and it can be said that their survival rate is many times higher than that of other stocks. This was most evident during the outbreak of the Covid-19 pandemic. This is precisely why you can feel confident when buying into these types of stocks.

Things to Note When Investing in Blue Chip Stocks for the First Time

If you are new to this type of stock and are considering investing, be cautious and make sure to understand the following basic tips to avoid unnecessary risks.

Although Blue Chip stocks are considered a very secure and low-risk type of investment, and the companies issuing Blue Chip stocks typically have a higher survival rate than others, during periods of economic recession or market challenges, regardless of how good Blue Chip stocks are, investors still need to consider and distribute their investments effectively across different portfolios, rather than focusing too heavily on a single type of stock.

This approach will help avoid neglecting other profitable investment channels in the market. Investors should diversify their portfolios to better manage risks. Even when investing in Blue Chip stocks, investors should still diversify their portfolios.

Blue Chip investors should select stocks with strong reputations and minimal volatility. At the same time, investors must also build safe and appropriate investment strategies to avoid significant risks.

Blue Chip Stocks Group 2022 on the HOSE Stock Exchange

Refer to the Blue Chip stock group table for 2022 below and evaluate to select the most suitable stock for yourself:

Company Name	Stock Code	Market Capitalization	Latest Stock Price	Net Revenue (2020)
Vietnam Dairy Products JSC (Vinamilk)	VNM	210,249.52 billion VND	100,600 VND	59,636,286 billion VND
FPT Corporation	FPT	59,341.62 billion VND	75,700 VND	11,466,154 billion VND
Vingroup Group	VIC	354,140.48 billion VND	104,700 VND	110,462,372 billion VND
Vietcombank	VCB	349,747.14 billion VND	94,300 VND	36,225,229 billion VND
Mobile World Investment JSC	MWG	59,757.13 billion VND	128,200 VND	108,546,020 billion VND
Hoa Phat Group	HPG	152,576.67 billion VND	46,050 VND	90,118,543 billion VND
Phu Nhuan Jewelry JSC	PNJ	18,916.90 billion VND	83,200 VND	17,511,018 billion VND
Vietnam Gas Group	GAS	179,911.30 billion VND	94,000 VND	64,150,007 billion VND
Hau Giang Pharmaceutical JSC	DHG	12,891.56 billion VND	98,600 VND	3,755,619 billion VND
Masan Group	MSN	101,962.51 billion VND	86,800 VND	77,217,808 billion VND

*Note: These values reflect the Blue Chip stock data at the time of writing. The values of equity stocks fluctuate continuously. Therefore, this table is for reference only.

Above are all the relevant details about Blue Chip stocks. We hope that this information helps you in learning about and investing in these stable, valuable stocks.