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The 3 Most Undervalued Dow Stocks to Buy in September 2023


  • These undervalued Dow stocks have multiple, strong, positive catalysts and are poised to deliver strong returns for investors.
  • Caterpillar (CAT): CAT is poised to benefit from powerful U.S. economic growth and multiple other macro trends.
  • Goldman Sachs (GS): The IPO market is making a comeback, and the valuation of GS stock is very low.
  • Intel (INTC): According to INTC, benchmarks show that its AI chip is a cost effective alternative to industry leaders.
dow stocks - The 3 Most Undervalued Dow Stocks to Buy in September 2023

Source: Pavel Ignatov / Shutterstock.com

The Dow Jones Industrial Average has climbed 5.3% so far this year. The index is trailing the S&P 500, which has climbed 17.8%. Additionally, at least two Dow stocks, Johnson and Johnson (NYSE:JNJ) and Walgreens (NYSE:WBA), are being weighed down by potentially ruinous litigation. Meanwhile, Home Depot (NYSE:HD) is a victim of the frozen residential real estate market and Disney’s (NYSE:DIS) business model is falling apart. So I would definitely not recommend buying an ETF that tracks Dow stocks. Still, there are some heavily undervalued Dow stocks. For long-term investors, here are three such names to consider.

Caterpillar (CAT)

stocks to buy: construction workers work on a concrete floor
Source: Shutterstock

In an Aug. 29 article, Barron’s noted that industrial stocks had retreated in previous weeks. And indicated that Caterpillar (NYSE:CAT) was one of the names that investors should consider buying. The publication hypothesized that the U.S. industrial sector could keep growing if the Fed stops raising its rates, as is now widely expected, and the American economy continues to expand.

With the Fed predicting that the economy grew at a very high 5.6% rate last quarter, the latter scenario is very likely to materialize, in my opinion. Additionally, CAT is poised to benefit from the energy revolution, which will require much more mining and many more battery factories.

Also likely to boost CAT is the onshoring trend in the U.S. and the current, elevated oil prices. In addition to construction equipment, Caterpillar sells equipment used in mines and oil exploration.

Despite all of these strong, positive catalysts, CAT stock is changing hands at a very low forward P/E ratio of 13.7.

Goldman Sachs (GS)

hands at desk near laptop computer, with one hand holding a pile of hundred dollar bills. Bank stocks
Source: shutterstock.com/CC7

Goldman Sachs (NYSE:GS) CEO David Solomon said in a Sept. 12 interview that the performance of capital markets is rebounding. That’s certainly very positive news for Goldman, which makes most of its money from handling deals in those markets.

Solomon also noted that “we have a handful of other very significant IPOs in the market.” And the CEO added that if those IPOs go well, he believes that many more sizeable companies will also decide to launch their own IPOs. Of course, the latter scenario would boost Goldman’s financial performance.

Finally, Solomon reported that he expects the capital markets to continue improving for the rest of this year.

Intel (INTC)

Close up of Intel (INTC) sign at entrance of The Intel Museum in Silicon Valley. Intel is an American multinational corporation and technology company.
Source: JHVEPhoto / Shutterstock.com

Very encouragingly for Intel (NASDAQ:INTC), the company recently released some impressive benchmarks. According to wccftech Intel’s new AI chip could go toe-to-toe with Nvidia’s (NASDAQ:NVDA). Moreover, the chips are significantly less expensive.

In light of that point and multiple reports saying that Nvidia is unable to come close to supplying enough of its GPU chips to meet demand, I believe that Intel looks poised to generate a great deal of revenue and profits.

What’s more, Intel CEO Pat Gelsinger has said that he expects the chip maker to benefit from the proliferation of PCs that are designed to enable consumers and companies to more easily exploit certain capabilities of AI.

On the date of publication, Larry Ramer held a long position in INTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

Article printed from InvestorPlace Media, https://investorplace.com/2023/09/the-3-most-undervalued-dow-stocks-to-buy-in-september-2023/.

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