Stocks
Way Undervalued
  Finding undervalued stocks

Undervalued Dow Jones Stocks

Here is the current list of all companies in the Dow Jones, sorted by their 2014 Value Discount:

Ticker

P/E Ratio Used

Closing Price on 5/1/14

Current Value Discount

2014 Value Discount

2015 Value Discount

Company Name
UNH 10.6 $74.95 -23% -22% -15% UnitedHealth Group
MMM 16.6 $140.81 -19% -12% -3% 3M
DIS 17.3 $79.56 -21% -12% 0% Walt Disney
CVX 10.3 $124.94 -8% -10% -7% Chevron Corporation
MSFT 13.4 $40.00 -11% -10% -4% Microsoft Corporation
NKE 22.3 $72.92 -10% -10% 3% Nike
V 20.8 $206.09 -21% -9% 5% Visa
XOM 12.2 $101.41 -11% -9% -8% Exxon Mobil
KO 18.3 $40.78 -16% -6% 1% Coca-Cola
UTX 16.1 $116.80 -14% -6% 5% United Technologies
CAT 16.0 $105.07 -10% -5% 9% Caterpillar
WMT 14.3 $79.70 -13% -5% 3% Walmart
PG 18.8 $82.34 -15% -4% 3% Procter & Gamble
MCD 17.0 $100.96 -7% -3% 5% McDonald's
JNJ 16.7 $100.53 -13% -2% 5% Johnson & Johnson
INTC 14.1 $26.45 -1% 1% 7% Intel
GE 15.9 $26.77 -28% 1% 9% General Electric
AXP 16.8 $86.82 -2% 5% 16% American Express
DD 16.7 $66.76 -21% 8% 22% Du Pont
TRV 10.8 $90.83 23% 10% 8% Travelers
BA 19.0 $128.46 -14% 12% 23% Boeing
HD 20.5 $79.33 -3% 15% 33% Home Depot
MRK 19.8 $59.62 -51% 15% 22% Merck
JPM 11.7 $55.72 -15% 17% 29% JP Morgan Chase
GS 12.2 $160.37 15% 20% 29% Goldman Sachs
IBM 13.1 $193.53 -1% 21% 35% International Business Machines
PFE 18.0 $31.15 84% 29% 33% Pfizer
T 17.7 $35.58 71% 35% 41% AT&T
CSCO 16.0 $23.01 6% 38% 47% Cisco Systems
VZ 21.8 $47.22 85% 66% 78% Verizon Communications

At first glance, you might think Verizon (VZ) is Undervalued.  But look at the current value discount of 85%.  That means Verizon is already undervalued.  That could still mean VZ is poised to go up.  But, given the fact that last year VZ has been trading at a lower P/E than normal could likely mean that the market now values Verizon lower than in past years.  That basically means that the 21.8 P/E ratio used above will decrease over time, but the stock price will not.

I like to see companies that are valued where they normally are historically.  Cisco fits this nicely.  At 6%, they're

currently valued close to where we would expect.  38% and 47% for CSCO show that unless market sentiment changes (which is hard to predict), the stock is the most undervalued on the list when compared to the rest of the list.

Other companies that fit this model are Boeing, Home Depot, JP Morgan Chase, and IBM.  These all have double-digit future value discounts.  Even though JP Morgan has a -15% current value discount, that just means they are still in process of reaching this year's price level.  The negative number doesn't scare me.

You typically won't find any Way Undervalued companies in the Dow Jones since so many people closely follow Dow Jones stocks, they are rarely allowed to reach that level of undervalued.  Compared to Way Undervalued stocks, these stocks have much less room for price appreciation.  But, they are also likely to be less risky.

Make sure you check back over time to see how these stocks perform and we'll see if any of the companies mentioned above perform well.