According to many people, investing in the stock market carries very few differences from gambling your money away in Las Vegas. However, to those who invest in blue chip stocks, it is an entirely different story. Blue chip stocks are those stocks that have been proven over time to be reliable and a vehicle at least to keep up with inflation, and in some cases to make money. These are the stocks that make up the various indexes, and they carry names that are well known in most households, including Disney, Coca Cola, Ford, Bank of America, and Johnson and Johnson just to name a few. Naturally, however, even among blue chip stocks, there are some that have better growth potential than others. Some others are just undervalued, making them good investments as well.
When you are looking for blue chip stocks to buy, you will need to look for stocks that are in industries where there is room for growth, and where the stocks are not overvalued. If a stock, blue chip or otherwise, is over about $150, you may want to wait until there is a stock split before buying. This is when one share of stock gets split into two or more shares of stock. Google is a good example of a stock that you probably need to wait for a split on as it is currently running somewhere near $500 per share, especially if you don’t have very much money to invest. Intel is a good investment right now as the stock is closer to $20 per share, meaning that you can buy a round lot (100 shares) for around $2000. They also pay dividends on their stock, which you can re-invest and use to build up your portfolio.
There are other stocks that may be undervalued, but they are in industries that are currently unstable, and as a result, may carry more risk as investments. These include such stocks as banks, including Bank of America, as well as automotive stocks like Ford and GM. Chances are good that these stocks will make a comeback, but they are going to take a long time to rebound. They are still, however, blue chip stocks.
If it is true security that you are looking for, rather than growth, you need to stick to those stocks that are in evergreen industries. There are some stocks that rarely, if ever lose value, and when they do, they rebound quickly. These include Walmart, Disney, Coca Cola, Pepsi Co, and Johnson and Johnson. Each of these brands is easily recognizable and people tend to buy these brands, even during times of recession. In fact, Walmart’s sales actually tend to go up during a recession.