The 3 Most Undervalued Dow Stocks to Buy in June 2024

  • The Dow Jones Industrial Average is moving slowly and steadily higher. Some of the cheap names in the average may be worth considering this June for value investors seeking a deal in this scorching market.
  • Disney (DIS): Nelson Peltz has sold out of his position. Could this be a positive development for Bob Iger and company?
  • UnitedHealth Group (UNH): The Dow’s largest contributor also looks like one of its cheapest.
  • Johnson & Johnson (JNJ): Beyond the talc powder overhang, the rest of the business looks enticing enough to help its stock reverse course.
undervalued dow stocks - The 3 Most Undervalued Dow Stocks to Buy in June 2024

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With a wild positive finish on the last trading day of May 2024, thanks in part to some decent inflation data, investors now set their sights on the summer months. While it was a somewhat nail-biting finish to the month of May, it was one of the better months in quite a while, with the S&P 500 rising close to 5%.

Meanwhile, the Dow Jones Industrial Average was somewhat flatter, up around 2% for May. The price-weighted and value-heavy Dow had a respectable showing, but one can’t help but notice big laggards that held the basket of stocks back.

Undoubtedly, Salesforce (NYSE:CRM) weighed heavily on the Dow after reporting a quarter that caused shares to sink around 20% in a day. Though the next day saw an abrupt recovery of more than 7%, CRM stock still caused quite the bump for the Dow. In this piece, we’ll check out three Dow stocks, like CRM, that have been lagging of late but seem to be in great shape to make up for lost time.

Disney (DIS)

Disney logo on a store front. DIS stock.
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Media and entertainment firm Disney (NYSE:DIS) had a rather rough past month, as activist investor Nelson Peltz announced he’d sold out of his entire position in the name. It’s not hard to imagine management and some shareholders feeling relieved now that the long-fought proxy battles are now in the rearview.

Though only time will tell if Peltz returns, I think it’s safe to say he’s happy with the gain he’s sitting on, especially now that DIS stock is back on the retreat. At writing, shares of Disney are down more than 6% in the past month.

With Pixar slashing 14% of its workforce, questions linger about how Disney will be able to keep growth going strong at its streaming platform, Disney+, as the company tries to steer it further toward profitability. With Inside Out 2 coming soon to theatres, perhaps Disney will have the hit summer blockbuster it needs to help bring just a bit of the magic back to the stock. Either way, DIS stock looks like one of the most undervalued Dow members going into June.

UnitedHealth Group (UNH)

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UnitedHealth Group (NYSE:UNH) and the rest of the insurers have been feeling pressured lately. With the stock going for just shy of $500 per share, UnitedHealth Group is the largest holding of the Dow Jones index. So, you can bet that the Dow will feel weighed down when UNH stock sinks lower.

With UNH stock recently breaking its nasty six-session losing streak, perhaps dip-buyers should consider the Dow Jones heavyweight as it looks to recover some of the ground it lost over the past few weeks. Though it’s been a turbulent ride lately, UNH stock hasn’t really been a massive laggard by any means.

Shares are pretty much where they were when we entered 2022. Now stuck in a lengthy consolidation channel, UnitedHealth needs a big catalyst or quarter to stage a breakout. Perhaps such a moment could be in the cards at some point in the second half. The expansion of UnitedHealth Group’s Catalyst program, which aims to help those living with chronic conditions, could act as a catalyst for membership growth.

At 17.3 times forward price-to-earnings (P/E), perhaps it’s time to give the Dow Jones’ largest holding the benefit of the doubt.

Johnson & Johnson (JNJ)

A red Johnson & Johnson (JNJ) sign hangs inside in Moscow, Russia.
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The talc (baby) powder overhang continues to be a thorn in the side of Jonhson & Johnson (NYSE:JNJ). Recently, some plaintiffs filed a lawsuit regarding the firm’s past bankruptcy filings.

Undoubtedly, such suits could drag on for quite a while, but I don’t think investors should make too much of a matter that’s probably already well-baked into the stock at this point. Johnson & Johnson is trying to make a return to growth with a solid drug pipeline and a hunger for intriguing acquisitions.

The recently completed Shockwave Medical acquisition could help give sales growth a shot in the arm moving forward and bolster Johnson & Johnson’s cardiovascular business. Now down 2% over the past month, JNJ stock stands out as a compelling Dow bargain at 13.66 times forward P/E as the company looks to reverse its nasty year-long slump. The 3.41% dividend yield is a nice bonus as well!

On the date of publication, Joey Frenette held shares of Disney and Salesforce. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

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