Blue-Chip Stocks Guide: Should You Buy in During a Market Downturn?

Blue-Chip Stocks Guide: Should You Buy in During a Market Downturn?

Even when the market is volatile, blue-chip stocks don’t stop being a significant part of investment plans. When you hear of blue-chip companies, think of the huge stable companies—pillars of the economy. They make up big portions of many investment portfolios because they are low-risk. 

The coronavirus is greatly affecting the market—and not in a good way. Many investors have no idea what to do with their portfolio. Blue-chip stocks are selling at a much lower price and it may be wise to buy them during a downturn. 

What Are Blue-Chip Stocks? 

It is hard to come up with a perfect definition for blue-chip stocks. So, to help you understand, here are the characteristics of companies in that category.

Large market cap: they are big fish in the stock market. Large-cap stocks are those with a market cap of $10 billion and over. 

History of stable earnings: the blue-chip status is not achieved overnight. These companies have built a reputation for decades. 

Good growth prospects: once they become blue-chip companies, these businesses don’t stop there. They focus on future growth.

Market leadership: the companies are known even to non-investors.

Why Invest in Blue-Chip Stocks?

Even when the market is shaky, blue-chip stocks remain to be a great investment. Their characteristics ensure a high chance of outlasting a market downturn. 

The prolonged effects of a recession and a huge decrease in revenue are enough to kill most companies. But the extensive borrowing and deep pockets of blue-chip companies will keep them open even in the worst of times. 

Here are some blue-chip companies that have lived through market downturns:

  • DuPont
  • JPMorgan Chase
  • Cigna
  • McKesson
  • Pfizer 

Buying Blue-Chip Stocks

You can easily get a blue-chip stock if you own a brokerage account for selling and buying stocks in the U.S.

Follow the steps below:

  • Conduct an extensive research on blue-chip stocks.
  • Pick a blue-chip company that you like.
  • Place an order in your account.

Where to Get Blue-Chip Stocks

If you have access to Nasdaq or NYSE stocks or an investment app, you can purchase blue-chip stock. Many experts recommend the following top brokers. 

  • Webull
  • TD Ameritrade
  • Fidelity Investments
  • SoFi Wealth
  • Public

A List of Blue-Chip Stocks

Finding a comprehensive list is not that simple. But you can start at the Dow Jones Industrial Average (DJIA).

Here are a few blue-chip companies:

  • 3M Company
  • American Express Company
  • Apple Inc.
  • The Boeing Company
  • Cisco Systems, Inc.
  • The Coca-Cola Company
  • The Walt Disney Company
  • Johnson & Johnson
  • Nike, Inc.
  • Visa Inc.
  • Walmart Inc.

Blue-Chip Vs Large-Cap Stocks

All large-cap stocks are not blue-chip stocks. Some large-cap stocks are not strong enough. Generally, many large-cap stocks make a safe investment. But market capitalization should not be your only determinant. Not every company will stay big. 

Blue-Chip Funds

There are mutual funds and ETFs whose sole focus is blue-chip stocks—think S&P 500 funds. 

Blue-chip funds make an awesome investment and a diverse fund will help your portfolio when the market is volatile. 

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