The Identification of Blue Chip Stocks in Underdeveloped Stock Markets of South-Eastern Europe

Abstract

The main goal of this paper is to explain the discriminatory variables between the blue chip and second-grade stocks in the underdeveloped stock markets of the South Eastern European (SEE) region. Since there is relatively less empirical research on the stock selection in underdeveloped markets, with even less studies on the markets in the transition economies of the SEE region, this paper is designed to shed some light on the identification of blue chip stocks from this region. Results presented in this paper provide confirmatory evidence that the blue chip stocks from the selected underdeveloped stock markets of the SEE region can be identified by examining their dividend yields, price to cash flow and EPS. Therefore, both institutional and individual investors need to focus on these variables when selecting stocks from these markets in order to reduce the risk associated with investing in equities.

Keywords

• blue chip stocks
• discriminant analysis
• SEE region