Microsoft was formed by college computer wizards Bill Gates and Paul Allen back in 1972 and together they grew the company into one of the largest corporations in the history of business. Today, Microsoft’s market cap sits at a stunning $1.5 trillion, making it one of the 3 largest companies in the world. Microsoft produces many of the software staples we find on our computers like Windows, Office and Excel. Microsoft also produces hardware like the Xbox video game consoles and Surface tablets.
Last year, Microsoft made over $143 billion in revenue and the company stock is up more than 49% in the last 12 months. Recently, Microsoft made headlines by announcing the next generation of the Xbox gaming console. The company will be releasing 2 different gaming systems for the 2020 holiday season: the $499 Xbox Series X and the cheaper $299 Xbox Series S. Both systems will be available for purchase in November.
|Vol / Avg.34.559M / 30.284M||Mkt Cap2.038T|
|52 Wk Range213.460 - 315.940||Day Range269.519 - 275.000|
The online commerce giant has soared since the 2020 March lows as more and more people began doing their shopping exclusively on the internet. Like Microsoft, Amazon now boasts a market cap of more than $1.5 trillion and has become among the most successful companies in American history. Together with Facebook, Apple, Netflix and Google, these 5 companies make up the FAANG stocks that have provided massive gains to investors for the better part of the last decade.
The company has recently expanded its reach into the transit sector by adding several new planes in its air fleet. Amazon prides itself on its next-day shipping guarantees and adding new aircraft not only strengthens that guarantee but also allows the company to phase out 3rd-party deliverers like UPS and FedEx. Additionally, Amazon announced plans for 1,000 new warehouses in suburban areas and hiring 100,00 more workers.
|Vol / Avg.58.597M / 64.746M||Mkt Cap1.031T|
|52 Wk Range81.430 - 170.832||Day Range98.000 - 100.845|
Coca-Cola is the largest nonalcoholic beverage entity in the world, owning and marketing some of the leading carbonated beverage brands, such as Coke, Fanta, and Sprite, as well as nonsparkling brands, such as Minute Maid, Georgia Coffee, Costa, and Glaceau. Operationally, the firm focuses its manufacturing efforts early in the supply chain, making the concentrate (or beverage bases) for its drinks that are then processed and distributed by its network of more than 100 bottlers. Concentrate operations represent roughly 85% of the company’s unit case volume. The firm generates most of its revenue internationally, with countries like Mexico, Brazil, and Japan being key markets outside of the U.S.
|Vol / Avg.13.716M / 12.687M||Mkt Cap261.049B|
|52 Wk Range54.015 - 67.150||Day Range59.880 - 60.750|
AbbVie is a pharmaceutical company with a strong exposure to immunology and oncology. The firm’s top drug, Humira, represents close to half of the company’s current profits. The company was spun off from Abbott in early 2013. The recent acquisition of Allergan adds several new drugs in aesthetics and women’s health.
|Vol / Avg.4.676M / 5.967M||Mkt Cap277.530B|
|52 Wk Range134.100 - 175.900||Day Range155.100 - 157.050|
Berkshire Hathaway Inc. Common Stock (NYSE:BRK/A)
Berkshire Hathaway is a holding company with a wide array of subsidiaries engaged in diverse activities. The firm’s core business segment is insurance, run primarily through Geico, Berkshire Hathaway Reinsurance Group, and Berkshire Hathaway Primary Group. Berkshire has used the excess cash thrown off from these and its other operations over the years to acquire Burlington Northern Santa Fe (railroad), Berkshire Hathaway Energy (utilities and energy distributors), and the firms that make up its manufacturing, service, and retailing operations (which include five of Berkshire’s largest noninsurance pretax earnings generators: Precision Castparts, Lubrizol, Clayton Homes, Marmon, and IMC/ISCAR). The conglomerate is unique in that it is run on a completely decentralized basis.
|Vol / Avg.4.486K / -||Mkt Cap-|
|52 Wk Range- - -||Day Range458.600K - 463.854K|
American Express (NYSE:AXP)
American Express Company is a globally integrated payments company. It provides customers with access to financial products that enrich lives and build business success. These financial products include credit cards, corporate cards, travel cards, premium cards, travel insurance and health insurance.
The financial services stock has a market cap of $94 billion and an EPS of $4.06. It has a 52-week low of $67 and a 52-week high of $138.13. American Express has an annual dividend yield of $1.72 per share. It has high liquidity and trades more than 1.1 million shares per day and generated revenue of $30 billion in 2019.
|Vol / Avg.3.987M / 3.282M||Mkt Cap122.447B|
|52 Wk Range130.820 - 194.300||Day Range161.700 - 164.570|
Along with Mastercard, Visa is 1 of 2 primary credit card companies functioning in the United States, with American Express and Discover following behind. Visa has a $450 billion market cap, which surpasses Mastercard by more than $100 billion. Visa has become more than the credit card provider though — it’s a multifaceted payments processing company with a wide range of products and an international footprint.
Visa has met or beaten earnings expectations for 4 straight quarters and has seen both profit and revenue growth in each of the last 5 years. With a firm foothold in the payments processing industry, Visa will likely be a blue chip stock for many years to come.
|Vol / Avg.8.971M / 5.576M||Mkt Cap466.491B|
|52 Wk Range174.830 - 250.580||Day Range218.680 - 222.505|
Johnson & Johnson (NYSE:JNJ)
Johnson & Johnson is among the largest pharmaceutical firms in the U.S. with a $387 billion market cap and over 132,000 employees. Johnson & Johnson manufactures many of the popular medicine brands we use for common aches and pains, like Tylenol, Benadryl, Sudafed and Neosporin. The company also has branched into immunology, neuroscience and infectious disease. They are one of many pharmaceutical firms currently working on a coronavirus vaccine.
Johnson & Johnson’s stock has been one of the stock market’s longest-term winners since going public in the 1960s. However, the headlines haven’t always been positive. The Tylenol murders of the 1980s gained national headlines and the perpetrators were never caught. The State of New York also recently filed a $2 billion lawsuit against the drug manufacturer on the grounds that they downplayed the risks of opioids and spent millions marketing them as safe.
|Vol / Avg.8.377M / 7.470M||Mkt Cap480.331B|
|52 Wk Range150.710 - 186.680||Day Range152.170 - 154.130|
UnitedHealth Group (NYSE:UNH)
UnitedHealth Group is one of the largest private health insurers, providing medical benefits to 50 million members globally, including 5 million outside the U.S. at the end of 2021. As a leader in employer-sponsored, self-directed, and government-backed insurance plans, UnitedHealth has obtained massive scale in managed care. Along with its insurance assets, UnitedHealth’s continued investments in its Optum franchises have created a healthcare services colossus that spans everything from medical and pharmaceutical benefits to providing outpatient care and analytics to both affiliated and third-party customers.
|Vol / Avg.3.163M / 3.289M||Mkt Cap447.906B|
|52 Wk Range449.950 - 557.990||Day Range475.720 - 481.450|
Lockheed Martin (NYSE:LMT)
Lockheed Martin is the largest defense contractor globally and has dominated the Western market for high-end fighter aircraft since the F-35 program was awarded in 2001. Lockheed’s largest segment is Aeronautics, which is dominated by the massive F-35 program. Lockheed’s remaining segments are rotary & mission systems, which is mainly the Sikorsky helicopter business; missiles and fire control, which creates missiles and missile defense systems; and space systems, which produces satellites and receives equity income from the United Launch Alliance joint venture.
|Vol / Avg.1.069M / 1.381M||Mkt Cap120.891B|
|52 Wk Range374.000 - 498.750||Day Range471.300 - 479.250|
Home Depot (NYSE:HD)
Home Depot is the world’s largest home improvement specialty retailer, operating more than 2,300 warehouse-format stores offering more than 30,000 products in store and 1 million products online in the United States, Canada, and Mexico. Its stores offer numerous building materials, home improvement products, lawn and garden products, and decor products and provide various services, including home improvement installation services and tool and equipment rentals. The acquisition of distributor Interline Brands in 2015 allowed Home Depot to enter the maintenance, repair, and operations business, which has been expanded through the tie-up with HD Supply (2020). The addition of the Company Store brought textile exposure to Home Depot’s lineup.
|Vol / Avg.4.788M / 3.427M||Mkt Cap293.860B|
|52 Wk Range264.600 - 346.950||Day Range287.600 - 292.890|
PepsiCo is a global leader in snacks and beverages, owning well-known household brands including Pepsi, Mountain Dew, Gatorade, Lay’s, Cheetos, and Doritos, among others. The company dominates the global savory snacks market and also ranks as the second-largest beverage provider in the world (behind Coca-Cola) with diversified exposure to carbonated soft drinks, or CSD, as well as water, sports, and energy offerings. Convenience foods account for 55% of its total revenue, with beverages making up the rest. Pepsi owns the bulk of its manufacturing and distribution capacity in the United States and overseas. International markets make up 40% of total sales and one third of operating profits.
|Vol / Avg.3.812M / 4.517M||Mkt Cap245.165B|
|52 Wk Range154.860 - 186.810||Day Range176.280 - 178.170|
Texas Instruments (NASDAQ:TXN)
Dallas-based Texas Instruments generates over 95% of its revenue from semiconductors and the remainder from its well-known calculators. Texas Instruments is the world’s largest maker of analog chips, which are used to process real-world signals such as sound and power. Texas Instruments also has a leading market share position in processors and microcontrollers used in a wide variety of electronics applications.
|Vol / Avg.4.217M / 5.036M||Mkt Cap161.879B|
|52 Wk Range144.460 - 191.340||Day Range176.246 - 180.660|
In sports, a blue-chip prospect is thought to be a can’t-miss talent — someone who will excel at the game no matter what obstacles are thrown. Blue chips are safe bets with high floors and potentially limitless ceilings. Blue chip stocks are the same way. When investors buy blue chip stocks, they want proven track records and promises of future success. And while investing in stocks is never a completely safe bet, blue chips are often stocks with the best risk/reward trade-off. If you want to add blue chip stocks to your portfolio, here are some very successful stocks with staying power. Remember, though, you must diversify your blue chip investments just like you would any others.
Blue chip is a nickname given to stocks of a well-established and trusted company. These are companies that investors rely on due to their credibility and reliability. Think industry leaders and household names. These large-cap stocks often have a market valuation of $10 billion or more.
While blue chip companies are reliable, that also comes with slower growth. This makes them a conservative option for investors looking for a safe bet for their already established portfolio. You can also begin to establish your portfolio using these same assets, especially if you have enough money to invest in something that’s a bit more expensive. While you don’t want to overspend, you also want to hold onto assets that are more appropriate for you.
Blue chip stocks can be identified by several shared traits. Remember, not all blue chip stocks are the same, but they have underlying characteristics that make them easy to spot.
- Growth history: Blue chips always have a solid history of sustained growth. This also means good future prospects. They’re already established.
- Component of a market index: You’ll find these stocks in major market indexes, like the S&P 500 or the Nasdaq 100.
- Social relevance: Blue chip stocks tend to have a bit of social relevance that, while it cannot prevent them from failing, keeps these companies in the spotlight. As these companies remain relevant, they will tend to retain their value more easily.
- Global presence: Blue chip stocks will tend to perform better if they have a global presence and are relevant beyond North America.
- Higher dividend payouts: Dividends are regular payments made to investors from a company’s revenue. While there’s no requirement that a blue chip stock pays a dividend, it’s a common trait. Think Verizon’s 5% dividend. Small-cap stocks focus on expansion rather than dividends.
- Proper governance: Large companies are not invincible. They could begin to dip at any time, and it’s important to do your research and monitor how these stocks are performing.
- Diverse business channels: Blue chip stocks tend to be so diverse that they have several divisions or manage a range of products or services. Yes, a business can perform well with a small catalog, but a larger catalog allows more cash to flow.
- Government contracts: When you invest in consumer defensive stocks, you should look for government contracts that can sustain these companies for decades at a time.
- Long-term potential: Companies in the blue chip sector tend to be an integral part of American life, whether you see them or not. For example, defense contractors are always going to have relationships with the military, giving them long-term potential.
Compare Online Brokers
Comparing online brokers is an important part of the process. You must choose the perfect broker for your situation so that you can both save money and time, while building your portfolio.
- IBKR StocksMore DetailsBest ForActive and Global Traders
- MagnifiMore DetailsBest ForAI-Assisted Investing
- ETRADEMore DetailsBest ForMobile Traders
- CenterPoint SecuritiesMore DetailsBest ForMomentum traders
- WebullMore DetailsBest ForIntermediate Traders and Investors
- TD AmeritradeMore DetailsBest ForOptions Trading
- RobinhoodMore DetailsBest ForBeginners
Should You Invest in Blue Chip Stocks?
Nike. Coca-Cola. Starbucks. Walmart. These are names you know quite well. But should you invest in them? One thing these big names have in common is cost efficiency, which leads to a strong earnings growth and distribution. These companies also remain in the public eye all the time. Advertising never stops, and they’re often a part of our daily lives.
Stable and reliable, having a blue chip stock in your portfolio is never a bad thing. This stability points to strong financial footing, meaning no debt and a lot of efficiency. Blue chip stocks are often protected from severe volatility, making the risks quite limited. Although investing in a blue chip stock brings steady, long-term returns — they are well regulated and have potential for regular dividends — there are some cautions to keep in mind.
At the same time, you may not want to invest in certain types of blue chip stocks that might be in the midst of a downturn. For example, what if a blue chip business is about to be phased out of the market because its technology is derived from a bygone day? You need to be on the lookout for these things so that you can easily make wise choices.
Pros and Cons of Blue Chip Stocks
Advantages of Blue Chip Stocks
Hedged against massive volatility: Yes, the market might sway quite a bit, but blue chip stocks don’t tend to take the major downswings that you will see with other assets.
Long-term growth: Chances are, a blue chip stock will continue to grow for decades at a time, allowing pundits to say, ‘If you’d purchased [this blue chip stock] 30 years ago, here’s how much you’d have.” You can join in any time you like.
Strong dividend potential: Blue chip stocks are generally in a good position to generate dividends every quarter. While those dividends may change from 1 quarter to the next, they’re still paying you back for buying in.
Future income potential: Aside from the idea of collecting dividends, some investors might look at blue chip stocks are opportunities to guarantee some level of future income. While you can’t retire on blue chip dividends, you can add extra money to your budget by holding blue chip stocks that continue to grow and pay dividends.
Drawbacks of Blue Chip Stocks
Lag: Blue chip stocks can lag the market index, meaning they suffer from poor management practices and even scandals. They can also lose market share to smaller companies.
Won’t beat the market: Because blue chip stocks are stable, they are not going to have skyrocketing prices or super-quick growth like smaller companies and start-ups. They aren’t likely to stray from the averages when it comes to returns.
Tricky for young investors: A lot of blue chip stocks pay dividends, rather than investing in their own growth and increased stock value. For investors just starting out, you may want to find a stock that helps you build wealth, rather than a steady stock that won’t see much action.
Expense: Blue chip stocks tend to be rather expensive, and that’s why many novice investors might need to build their net worth before investing in blue chip stocks.
Changing sentiments: You may not lose all your money, but a blue chip stock that gets caught behind negative market sentiments may not gain the value you were anticipating.
The (Steady) Rise of Blue Chip Stocks
Blue chip stocks are the companies you trust. The ones in your home. The drinks and food on your shelf, the hair products in your bathroom, the credit card in your wallet, the shows you watch. Blue chip stocks are reliable, which is why they’re so appealing to investors.
While blue chip stocks are slow to grow, they’re still a trusted addition to any portfolio. That’s because these companies are predicted to have a bright future, whether through new products or inventions. Think Apple’s VR headset and Watch or Nike’s collaborations and new shoe technology. If you’re looking for dividend payouts and steady growth, blue chip stocks are perfect for your portfolio.
Recommended lecture: WHAT IS OVERHEAD SUPPLY?