The Dow Jones Industrial Average is a bastion of the traditional and the blue chip. Stocks that make up the 30 company index are typically very old, well-established, and on the more expensive side. The Dow is not typically the place to hunt for value buys or stocks coming on the cheap. However, that does not mean that the savvy investor cannot find the odd company in the DJIA that’s offered at a fair price. The Dow has any number of stocks that are coming at a cheap price based on their earnings and other valuations. So, here are four companies that, despite appearing on the Dow Jones Industrial Average are still coming at a price many would consider fair.
Chevron Corporation (CVX)
Market Cap: $202.42 billion P/E Ratio: 7.63
The massive earnings produced by oil companies are well documented and often the source of much debate in the political arena, but this also means that it’s hardly a secret that they’re the biggest earners. Chevron, though, still has a P/E ratio and Forward P/E ratio just over 7.5 as well as a P/S ratio of 0.80. This San Ramon, CA company is one of the largest in the world based on market cap, but its prestige and history don’t appear to have led the stock to an excessive price.
Hewlett-Packard (HPQ)
Market Cap: $48.64 billion P/E ratio: 8.65
Hewlett-Packard is a company facing serious market headwinds. As companies like Apple (AAPL) strive to make the PC itself obsolete, Hewlett-Packard has been fighting to keep what market share it does have. However, celebrity CEO Meg Whitman clearly thinks that she can turn things around and, should she do so, the falling share prices (off 40 percent in the last 12 months) could just as easily mean that the current slump is a buying opportunity. The current P/E ratio is just over 8.5, while the forward P/E is just over 5.5, the P/S is under 0.4, and the P/FCF is just over 9.
J.P. Morgan (JPM)
Market Cap: $163.28 billion P/E ratio: 9.50
The financial crisis of 2008 and the European debt fiasco of last year have meant that financial stocks have taken a real beating over the last five years. These rough seas, though, have also meant that previously pricey stocks are now available at more attractive values. JP Morgan is a fine example, with its P/E ratio under 10. The company’s also boating a P/B of just 0.86, a number that any classic value investor should find attractive. Financial stocks have been volatile in recent years, but if the sector rebounds JP Morgan could end up being a wise buy now.
Exxon Mobil (XOM)
Market Cap: $402.04 billion P/E ratio: 10.13
Clearly, the price for the entire company isn’t what’s cheap. With a market cap over $400 billion, Exxon Mobil remains the second most valuable company in the entire world. The oil giant rakes in cash, but it’s still not priced at a level that’s entirely unattractive. A P/E ratio just over 10 is more than reasonable, and a Forward P/E of about 9.5 means the company’s also cheap based on its projected growth. Throw in the recent news about a major deal with Russian oil giant Rosneft (RNFTF), and Exxon may have a bright future ahead.
