How to identify blue-chip shares?

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1 Answer 532
Xavier Roberts

Answered 7 months ago

They are the market’s biggest and brightest equities — the companies investors hold in the highest regard. Blue chips have usually demonstrated the following traits over many years:

  • Financial strength: Low or modest debt, a strong credit rating, and plenty of cash
  • Attractive business model and economics: Defensible market position and generates good cash flow
  • Respected management team: Long-tenured executives with vital track records
  • Long-term growth: Strong historical profit growth and expected to continue growing earnings in the future
  • Strong performance: Share price has risen steadily over the long term and has exhibited reasonably low volatility
  • Significant market capitalisation: Typically has a market cap among the largest in its industry, if not the largest.

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