Blue-chip firms distinguish themselves from all others by having endured—and overcome—the erratic growth typical of newer, smaller businesses. 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 offerings 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-accomplished companies may also have bright growth prospects; however, such growth invariably comes at a price. As these firms 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 consistency and stability. By investing in their stocks, shareholders can prospectively participate in more-reliable profits.
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