Glance at the Dow

I decided to put together a list of the Dow Jones Industrial Average and see how our valuation formula values each component.  I’ve listed the result below.  I also ran the test for each component to determine if it would pass our list of guidelines for the defensive and enterprising investors and calculated how the current price compares to the valuation.  Please note that by no means do we ever make any recommendations to buy or to sell and take a moment to read our disclaimer while you’re at it.

Dow Component Symbol Defensive Enterprising Value Price
3M MMM No Yes $137 $76.51
Alcoa AA Yes Yes $85 $36.60
American Express AXP No No $60 $41.53
American International Group AIG Yes Yes $15 $42.88
AT&T T No Yes $68 $35.01
Bank of America BAC Yes Yes $68 $36.74
Boeing BA No Yes $135 $76.60
Caterpillar CAT No Yes $172 $69.84
Chevron Corp CVX Yes Yes $284 $85.26
Citigroup C Yes Yes n/a $20.91
Coca-Cola KO No Yes $54 $58.85
DuPont DD No Yes $104 $45
ExxonMobil XOM No Yes $233 $82.49
General Electric GE No Yes $46 $32.23
General Motors GM No No n/a $21.96
Hewlett-Packard HPQ No Yes $71 $47.31
Home Depot HD Yes Yes $61 $25.88
Intel INTC No Yes $34 $20.07
IBM IBM No Yes $154 $113.94
Johnson & Johnson JNJ No Yes $66 $61.51
JPMorgan Chase JPM Yes Yes $130 $37.56
McDonald’s MCD No Yes $46 $52.27
Merck MRK No No n/a $41.75
Microsoft MSFT No Yes $35 $27.87
Pfizer PFE Yes Yes $47 $21.35
Proctor & Gamble PG No Yes $98 $65.80
United Technologies Corp UTX No Yes $109 $67.49
Verizon Communications VZ No Yes $63 $35.08
Wal-mart WMT No Yes $65 $49.90
Walt Disney DIS Yes Yes $63 $30.76

You’ll notice that a great deal of these are significantly undervalued currently according to our formula.  This is evidence that quantitative studies are only part of the requirements of prudent investing.  The intelligent investor must also take into account management styles and determine the likelihood of the market eventually meeting the estimated value.

4 thoughts on “Glance at the Dow

  1. mxwelder says:

    hi Michael from Ireland here. i have been using your site to educate myself in the ways of value investing and i find it very intuitive and helpful. as i am just a newbie,i recently read Phil towns rule no. 1 investor and b. grahams intel. investor, i find ye to be of great assistance and i believe there is some great opportunities out there for a value investor. if you have any Irish links or similar for me to contact i would be extremely grateful. Thankyou and keep up the good work.

  2. vaclavt says:

    Hi Vaclav from Czech republic here. I want to express my appreciation to you site. Your site was final piece of “motivation” which led me to buy Intelligent Investor book, which gave me a lot a I am sure will continue in giving me a value while reading it again in future.

    This valuation table in this article looks to very interesting and I believe US citizens have a great opportunity to invest in stocks these weeks.

    Me personally cannot invest in these stocks, because my currency (CZK) is getting stronger against USD so fast, that effectively will vanish all possible stocks gains). But if I were US citizen I would buy stocks which Warren Buffet has in his portfolio. I could buy them for similar price like him and he did magnitude probably better analysis than I could ever do 🙂 He has already done my homeweork:-) OK i am not american so I have to do my homework myself alone for european shares, which I think are on attractive levels as well.
    I wish to all readers and editors of this great site good luck in picking stock in these buyer friendly times. Vaclav

  3. AaronH says:

    Quick question?

    Warren Buffet mentioned that the best opportunities can be found abroad.

    This brings up a host of questions..

    If one does not want to invest in ADRs, then how do you invest abroad? Not everything has an ADR. Are accounting standards abroad the same as in the US? How are the different and how are the differences reported and transferable to Grahama’s value formula? Also is value investing something as readily practiced in Europe and the Commonwealth Nations? If not, then how can one take advantage of this fact? If one can invest say the Australian Securities Exchange, then how do you find out about tax issues (income and capital gains) etc?


  4. Serena says:

    I’ve been reading all over the web that now is the time to buy and get back into the market. Your numbers above seem to be confirming that. Another website I found (thanks to some of the comments left on this site) is Fisher Investments Blog. They talk a lot about the undervalue of the overall market, and how we should be preparting for a bull market coming soon.

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