Five All-Weather Blue Chips To Unlock Great Value

Last week turned out to be quite turbulent for stocks as familiar fears of a rate hike, sluggish global growth and the slump in oil continued to stalk markets. The unfortunate Paris terror attacks on Friday are likely to give markets another short-term scare, adding fuel to the fire.

Investors’ knee-jerk reaction to these deadly terror attacks and other “shocks” might extend losses for Mr. Market in today’s trade. However, the fallout will likely be quite short lived.

In fact, the current weakness in the market might be simply technical, if you reflect on the fact that the recent 13% bounce for stocks came too fast and too easy. Hence, this might just be a brisk round of profit-taking that retests investor convictions. And with the fundamental outlook remaining unchanged, the markets look set to recoup losses and go back up in no time at all.

Till then, we see a nice opportunity for investors to capitalize on the dip and stock up on some blue-chip stocks. However, the investing universe seems endless, with different investing styles, fundamental strategies and technical approaches. So what should investors go for? Well, as they say, it’s complicated. Or is it?

Does Size Matter?

There is that question again — whether to go for large caps with arguably limited price gain prospects, or to go for small caps, which most often have immense growth potential.

If we reassess the current economic scenario, we see that the Fed is going to hike interest rates at some point in the not-too-distant future. That is likely going to kick off a cloud of volatility that might shroud the equity markets for quite some time.

Also, that’s going to hit smaller stocks — which depend more on debt capital for growth — than larger ones.

Large-cap stocks, on the other hand, generally have been in the industry for a long time and have seen numerous ups and downs, and thus are better positioned to weather challenges.