Blue chip firms distinguish themselves from all others by having endured—and overcome—the erratic growth typical of newer firms. Blue chip companies came to dominate their industries by remaining one step ahead of competitors and successfully expanding in the global marketplace. These firms and their products have become so well recognized that their names are now international trademarks. Therefore, to remain successful, they need only build upon their existing, well-deserved reputation. Less-proven companies may also have bright growth prospects; however, such growth invariably comes at a price. As these companies struggle to succeed, their investors are confronted with volatile stock-price swings and the risk of company insolvency. The best blue chip firms, in contrast, offer quality and stability. By investing in their stocks, shareholders can prospectively participate in more-consistent profits.
