6 Undervalued Dow Stocks to Buy Before Wall Street Catches On Today let’s talk about six undervalued Dow stocks to buy before Wall Street catches on. These are often companies in cyclical industries on the Dow Jones with very low price-earnings, or P|E ratios, but Wall Street believes their earnings will tank. Fears of a severe recession will do that. But there are indications that the recession may not actually be as bad as the one from 2007 to 2009. For one, the housing market is not as overvalued, with large numbers of super-leveraged owners and investors. In addition, so far there have not been massive amounts of layoffs. On the other hand, consumer demand could slow quite significantly if inflation keeps rising . Even if it doesn’t, the high prices will take consumers a long time to get used to. Wages will have to catch up. That could take a long time and keep demand down. Click to Enlarge Source: Mark R. Hake, CFA The average P|E of this group of DJIA stocks is 17.x and the average yield is 2.83%, as can be seen in the graph on the right. The problem is, these Dow stocks are priced for a severe rout in earnings.