Brutal market activity has ravaged the ranks of blue-chip stocks.

As newcomers enter this fraternity of reliable national performers, some of the old guard has lost its membership altogether while others are capitalizing on the financial meltdown.

The virtues of stocks in a number of industries have become more visible as the blue-chip ranks have thinned. Up-and-comers include insurers Ace Ltd. and Aflac; industrial manufacturer Emerson Electric; handset chipmaker Qualcomm; and food-service provider Sysco.

They replace the likes of Fannie Mae, Freddie Mac, AIG, Morgan Stanley, Wachovia, and General Motors, once mainstays of elite portfolios. Even General Electric, Citigroup, and Pfizer have lost some of their luster.

"A reputation takes a long time to build and is easy to lose," says Mark Adelman, portfolio manager of the $47 million Westcore Blue Chip Fund (WTMVX), in Denver. "Some stocks once considered blue chips are now on the 'suspect' list, while others have proven they're blue chip."

JPMorgan Chase and Wells Fargo have taken advantage of the subprime debacle to become even mightier blue chips. Companies such as IBM, Intel, and American Express also managed to maintain their trustworthy aura.

The term "blue chip" comes from the game of poker, in which the blue chips have the highest value, yet these are the stocks favored by the conservative rather than gamblers. They represent large companies with widely accepted products, good credit quality, and low stock volatility.

"One has to be much more cognizant of balance sheets of companies than even one year ago," says Steven Check, editor of The Blue Chip Investor newsletter and portfolio manager of the $20 million Blue Chip Investor Fund (BCIFX), in Costa Mesa, Calif. "There could be something bad hidden somewhere."

There is renewed focus on the management's competence and track record, Adelman says. Investors must think carefully about what stocks they pick, yet keep in mind that they'll miss a big opportunity if they wait too long, he says.

One new blue chip is Ace Ltd. (ACE), a global insurance and reinsurance company that has strengthened its balance sheet and weathered the storms in recent years, says Adelman. Another he likes is asset manager Invesco Ltd. (IVZ), which has hired new management and improved its business while remaining an inexpensive stock in light of its franchise and growth opportunities.

Some tech stocks that lost blue-chip status in the bursting of the tech bubble have made a comeback, Adelman adds, noting Qualcomm (QCOM) and data network giant Cisco Systems (CSCO) in particular.

Stock prices have become detached from actual businesses, believes Check, yet quality companies will at some point again reflect their strength.

Emerson Electric (EMR), with a broad range of industrial business, has had solid earnings for a long time and plenty of free cash flow, says Check. Supplemental insurer Aflac (AFL) shouldn't be disregarded simply because it is a financial stock, he says. He lists drug chain Walgreen (WAG) as another new blue chip.

Strategists no longer take good earnings at face value.

"The problem with some large multinational companies is that, while the weak U.S. dollar fueled a lot of their earnings growth, the dollar has been firming up fast since mid-July," says Louis Navellier, editor of the Blue Chip Growth newsletter and chairman of Navellier & Associates, in Reno, Nev. "Investors should not get suckered into chasing dividend yield, since some companies will be cutting dividends."

Risk is ever-changing, says Navellier, and what seems safe now could be volatile down the road. While it will be a tough year for stocks, the plus for investors is that they won't have to pay a premium to obtain growth, he says. There's a lot of cash on the sidelines and, Navellier hopes, some of that will spark the market.

One blue-chip tech firm that Navellier owns is Research in Motion (RIMM), known for its BlackBerry line. But he considers the safest blue chips to be railroads such as Norfolk Southern (NSC) and Union Pacific (UNP) because of the shortage of railroads in this country.

"Just because a company is a blue chip doesn't mean it is always going to be one," says Paul Nolte, investment director of Hinsdale Associates, in Hinsdale, Ill. "Look at its last five years of earnings, see how much debt it has, see if its dividend has risen over time and whether it has a low relative valuation."

Many stocks are inexpensive and that means opportunities, says Nolte. Avoid firms whose debt, while not actually indicating imminent failure, could nonetheless limit future ability to do business, he says.

Nolte has elevated Sysco (SYY), PepsiCo (PEP), and Coca-Cola (KO) to the top echelon of blue-chip stocks because no matter what happens in the economy, consumers will continue to buy their products.

Among blue chips that have upheld their prior status, Adelman owns IBM (IBM), Intel (INTC), Microsoft (MSFT), and Nike (NKE). While some drug companies have been beaten up, he likes Abbott Laboratories (ABT) because it has a lot of cash flow.

Traditional blue chips that Check likes include Wal-Mart Stores (WMT), American Express (AXP), and Berkshire Hathaway (BRK). Finally, Navellier thinks McDonald's (MCD), Colgate-Palmolive (CL), and Monsanto (MON) look more blue chip than ever before. He also owns MasterCard (MA) and Northern Trust (NTRS).