In this piece, we will take a look at the 13 most undervalued dow stocks to buy according to analysts. If you want to skip our introduction to Dow stocks and our coverage of some recent stock market news, then you can take a look at the 5 Most Undervalued Dow Stocks To Buy According to Analysts.
The close of February has seen some of the strongest fireworks on the stock market despite the fact that only two months have passed since we entered 2024. Whether it's rapid and sometimes volatile share price moves, such as the ones experienced by Intuitive Machines, Inc. (NASDAQ:LUNR) and Snowflake Inc. (NYSE:SNOW), surprise dividends like the one announced by Meta Platforms, Inc. (NASDAQ:NVDA), a fundamental shift in valuation best shown by the consistent triple digit profit growth experienced by NVIDIA Corporation (NASDAQ:NVDA), or illustrious indexes such as the S&P 500 setting new records, the year has been filled with news and records.
Another change that took place in February was a reworking of the Dow Jones Industrial Average (DJIA). The Dow is one of the oldest stock indexes in the world, and its constitution is supposed to illustrate key pillars of the American economy to enable investors to take stock of a broad set of equities and find a suitable medium of trying to track the economy on the stock market. In February, the Dow and the Dow Transportation Index rethought its retail and transportation components, with the inclusion of Amazon.com, Inc. (NASDAQ:AMZN) in the Dow index and Uber Technologies, Inc. (NYSE:UBER) in the latter at the expense of Walgreens Boots Alliance, Inc. (NASDAQ:WBA) and JetBlue Airways Corporation (NASDAQ:JBLU), respectively. reflecting the dominance of technology in the U.S. economy.
In fact, after the latest changes, out of the 30 stocks that are part of the Dow 30, eight can be described as pure play technology companies such as Intel Corporation (NASDAQ:INTC) or Salesforce, Inc. (NYSE:CRM). If we loosen our definition to also count payments providers like Visa Inc. (NYSE:V) and American Express Company (NYSE:AXP), then more than a third of Dow stocks will belong to the technology industry.
These stocks are called blue chip stocks, with the moniker being representative of high value poker chips. Continuing with our list of examples of major stock market events in February, one of these, i.e. a surprise dividend, also came from a Dow stock. This dividend paying blue chip stock is the customer relationship management products and software provider Salesforce, Inc. (NYSE:CRM). Salesforce's earnings report for the fourth quarter and full year 2023 saw the firm beat analysts' adjusted earnings per share estimates of $2.27 by posting $2.29 in the metric during its latest quarter.
However, while the earnings report also accompanied a revenue beat, the guidance for the current quarter ended up slightly missing estimates. During Q1 2024, Salesforce, Inc. (NYSE:CRM) expects to rake in revenue ranging between $9.12 billion and $9.17 billion. Analysts on the flip side had an average estimate of $9.16 billion, and the revenue guidance for the full year also fell short.
This wasn't a surprise though. As part of its latest earnings release and report, Salesforce, Inc. (NYSE:CRM) announced that it will pay a 40 cent dividend, and at the firm's earnings conference call, CFO Amy Weaver shared:
Since the inception of our repurchase program, we have now returned $11.7 billion to shareholders with an average purchase price of $182 per share. And I'm incredibly excited to announce our first ever dividend. We are enhancing our capital return strategy reflective of the confidence we have in the future of our business and our ability to drive long term cash flow. Our Board has approved the initiation of a quarterly dividend starting at $0.40, more details of this dividend are available in our press release. Additionally, the Board has approved a $10 billion increase to our share repurchase plan, bringing the total authorization to $30 billion. Based on our progress to date, the remaining balance in the program is approximately $18 billion.
With these details in mind, we decided to see which Dow stocks are finding favor among analysts. A handful of notable picks are UnitedHealth Group Incorporated (NYSE:UNH), The Boeing Company (NYSE:BA), and NIKE, Inc. (NYSE:NKE).
13 Most Undervalued Dow Stocks To Buy According To Analysts
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Our Methodology
To make our list of the most undervalued Dow stocks according to analysts, we ranked all components of the Dow 30 stock index by the average share price percentage upside. Out of these, the stocks with the highest upside were selected. Data for the price targets was sourced from Yahoo Finance.
For these undervalued Dow stocks according to analysts, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
13 Most Undervalued Dow Stocks To Buy According To Analysts
13. Verizon Communications Inc. (NYSE:VZ)
Number of Q4 2023 Hedge Fund Shareholders: 63
Average Share Price Upside: 10%
Average Share Price Target: $44.07
Verizon Communications Inc. (NYSE:VZ) is the American telecommunications carrier headquartered in New York City. Its shares are rated Buy on average, and the firm has beaten analyst EPS estimates in three of its four latest quarters.
During last year's fourth quarter, 63 out of the 933 hedge funds profiled by Insider Monkey had bought and owned Verizon Communications Inc. (NYSE:VZ)'s shares. Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital was the firm's biggest hedge fund investor as it held a $948 million stake.
The Boeing Company (NYSE:BA), UnitedHealth Group Incorporated (NYSE:UNH), and NIKE, Inc. (NYSE:NKE) are met by in our list of the most undervalued Dow stocks according to analysts.
12. The Coca-Cola Company (NYSE:KO)
Number of Q4 2023 Hedge Fund Shareholders: 62
Average Share Price Upside: 11%
Average Share Price Target: $66.41
The Coca-Cola Company (NYSE:KO) is the iconic American carbonated beverage company with a global presence. The firm is utilizing to the fullest effect in 2024, with a new initiative designed to target followers of South Korean popular culture 'K-POP' with its beverages.
As of Q4 2023 end, 50 out of the 933 hedge funds profiled by Insider Monkey were the firm's shareholders. The Coca-Cola Company (NYSE:KO)'s largest investor in our database is Warren Buffett's Berkshire Hathaway due to its $528 million investment.
Walmart Inc. (NYSE:WMT) is the world's biggest brick and mortar retailer. Despite its heft, the stock is an analyst favorite, as Walmart Inc. (NYSE:WMT)'s average share price rating is Strong Buy making it one of the few firms of it kind.
During December 2023, 85 out of the 933 hedge funds surveyed by Insider Monkey had bought and owned Walmart Inc. (NYSE:WMT)'s shares. Ken Fisher's Fisher Asset Management was the biggest stakeholder through its $1.5 billion stake.
Microsoft Corporation (NASDAQ:MSFT) is the American technology behemoth headquartered in Redmond, Washington. It expanded its artificial intelligence offerings into the highly lucrative finance industry by offering Microsoft Copilot AI for Finance.
After digging through 933 hedge funds for their fourth quarter of 2023 shareholdings, Insider Monkey found that 302 had invested in the firm. Microsoft Corporation (NASDAQ:MSFT)'s biggest hedge fund shareholder is Michael Larson's Bill & Melinda Gates Foundation Trust as it holds $14.3 billion worth of shares.
Amgen Inc. (NASDAQ:AMGN) is a healthcare company that is one of the younger constituents of the Dow 30 blue chip stock index. February 2024 turned out to be a historic month for the firm as it officially opened its most advanced manufacturing plant in the world right here in the U.S. state of Ohio.
Insider Monkey's December quarter of 2023 survey covering 933 hedge funds revealed that 69 had bought a stake in Amgen Inc. (NASDAQ:AMGN). Josh Overdeck and David Siegel's Two Sigma Advisors was the largest shareholder since it owned 1.1 million shares that were worth $333 million.
Apple Inc. (NASDAQ:AAPL) is the most valuable consumer technology and electronics company in the world. Caught in the middle of Silicon Valley's attempts to become America's automotive hub, the firm was out with shocking news for employees in February 2024 when it revealed that the much fabled Apple Car project is no more.
After digging through 933 hedge funds for their fourth quarter of 2023 shareholdings, Insider Monkey found that 131 were the firm's investors. Apple Inc. (NASDAQ:AAPL)'s biggest investor in our database is Warren Buffett's Berkshire Hathaway since it owns a $174 billion stake.
An American cultural icon, McDonald's Corporation (NYSE:MCD) is a fast food retailer whose presence in the Dow 30 represents America's love of fast food and the convenience and affordability that it offers. To wit, not only has the firm beaten analyst EPS estimates in all four of its latest quarters, but the shares are also rated Buy on average.
As of December 2023 end, 63 out of the 933 hedge funds tracked by Insider Monkey had bought and owned McDonald's Corporation (NYSE:MCD)'s shares. Ken Griffin's Citadel Investment Group was the largest shareholder courtesy of its 1.7 million shares which were worth $532 million.
3M Company (NYSE:MMM) is a diversified American industrial company that makes consumer, healthcare, and other products. It has one of the highest dividends in our list of the top Dow stocks. 3M Company (NYSE:MMM) dividend currently sits at $1.51 and provides the stock with a 6.56% dividend yield.
During Q4 2023, 85 out of the 933 hedge funds tracked by Insider Monkey had piled into the stock. 3M Company (NYSE:MMM)'s biggest investor in our database is Dmitry Balyasny's Balyasny Asset Management due to its $289 million stake.
UnitedHealth Group Incorporated (NYSE:UNH), 3M Company (NYSE:MMM), The Boeing Company (NYSE:BA), and NIKE, Inc. (NYSE:NKE) are some top undervalued Dow stocks.