What is Blue Chip Stock? - Kakiforex | Forex markets for the smart money. What is Blue Chip Stock? What is Blue Chip Stock?

April 14, 2021

What is Blue Chip Stock?

 As an investor, you have certainly heard of blue chip stocks. However, what are blue chip stocks in Malaysia?

In this article, the INTRADAY team will discuss the advantages and disadvantages of blue chip stocks as well as the list of companies in the country that are classified as blue chip stocks.

Blue chip stocks are large and well -known company stocks as well as having strong financial performance for the long term.

These stocks have the ability to overcome difficult market situations and give high returns during good market conditions.

Overall, blue chip stocks are the strongest and largest stocks on Bursa Malaysia or in other countries' markets.

There are many stocks you can invest in the market. If you are interested in investing in well -performing stocks, you need to identify what makes the company’s stock a blue chip.

Several specifications can be considered to identify this blue chip company. That includes sustainable companies with consistent annual earnings over a long period of time, a stable debt -to -equity ratio, return on equity (RoE), market capitalization and price -to -earnings (PE) ratio.

There are several companies that are classified as blue chip. Among them are Maybank, Hartalega Holdings Berhad, TopGlove Corporation Berhad, Public Bank Berhad, Tenaga Nasional Berhad, Petronas Chemical Group Berhad, IHH Healthcare Berhad, Maxis, Sime Darby Plantation Berhad and MISC Bhd.

Blue chip stocks offer stable earnings over a consistent period of time when gaining investor trust and credibility. Therefore, the stable income of this stock is ideal for investors looking for investments that provide consistent returns.

Blue chip stocks are unlikely to show a steady rise in stock prices but have the advantage of uninterrupted dividend payments over time. In the long run, investors can profit from asset appreciation as well as dividend payments.

The stock also has a strong financial database with a strong balance sheet and cash flow. Having a solid underlying database this will provide minimal risk to investors, thus helping to reduce your investment risk.

The return for a blue chip stock is equal to its risk. For example, low risk, low return. Blue chip stocks provide high investment security from their stable business operations with low risk investments. Therefore, blue chip stocks are not suitable for aggressive investors who want high returns.

Blue chip stocks are unlikely to achieve impressive gains over time but such growth is small and stable. Blue chip stocks may be an ideal investment for investors who want to accumulate investment value in the long run due to their slow growth.

Blue chip stocks are more focused on rewarding shareholders than reinvesting in the business. Therefore, investors who do not need these dividends to generate surplus income can turn to more aggressive stocks to generate greater profits.

As an investor, before you decide to invest in blue chip stocks in the country, you first need to know your investment objectives and goals. Blue chip stocks are known to provide an advantage for the long term as they provide high value to investors looking for consistent returns, stable growth and easy to anticipate.

If you want high returns in a short period of time, then blue chip stocks are not for you. However, every investment has its risks. You need to understand what a blue chip stock is and does it fit into your investment strategy.