These Dow stocks are cheap and have more upside as index reaches key milestone

Published Thu, May 16 202411:51 AM EDTUpdated Thu, May 16 20241:25 PM EDT

The Dow Jones Industrial Average reached the 40,000 milestone level , but investors can still find inexpensive growth opportunities in the index. The recent gains this week have come on the back of April's consumer price index data, which showed inflation slightly easing. Expectations of interest rate cuts powered bullish market sentiment starting Wednesday, driving the major averages higher. The Dow is now up 5.9% in May and 6.2% year to date. Cheap opportunities in the index still exist for traders, however. Using the CNBC Pro Stock Screener Tool , we searched for stocks in the Dow that met the following criteria. Click the link above to run the screen yourself. Forward price-to-earnings ratio (P/E) below five-year average Consensus analyst price target calling for at least 10% upside from here E-commerce giant Amazon is currently trading at a forward P/E of 42.9, the highest on the list. However, it is still significantly lower than its five-year P/E of 70.8. Analysts forecast shares gaining nearly 22% from its current levels. Deutsche Bank reiterated Amazon as a buy on Tuesday, saying the company is "primed for a breakout." Year to date, shares are up 22.8%. Amazon entered the Dow in the first quarter. Chevron is another Dow member trading at affordable levels, according to history. Shares currently have a forward P/E of 12.6, versus the stock's average five-year P/E of 17.8. Shares are up 8.2% in 2024. While this outpaces the Dow's year-to-date gains, it is lagging behind the S & P 500 energy sector's 11.9% rise. The consensus price target on the stock indicates 14.2% upside from Wednesday's close. Although recent first-quarter earnings topped expectations, profit fell year over year on headwinds to its refineries and international gas business. The company is currently in a dispute with Exxon over Hess Corporation's oil assets in Guyana, which could extend into 2025. Payments processing company Visa could add another 10.1%, according to the average analyst price target on the stock. The stock's current forward P/E is at 27.6, slightly lower than its five-year average of 32.1. Piper Sandler initiated coverage on Visa with an overweight rating earlier this week. The firm is bullish on Visa's scale, "hard-to-replicate network" and sustainable secular growth story. The stock has advanced nearly 8% in 2024. Walmart shares may have reached a new 52-week high on Thursday, but the stock is still trading cheap compared to its historic levels. Shares are trading at a 25.3 forward P/E ratio, relative to the 28.2 five-year average P/E ratio. The big-box retailer beat on both top and bottom lines in the fiscal first quarter. Management cited growth in its e-commerce segment and gains with high-income shoppers. After the successful earnings report, D.A. Davidson called the stock a "best-in-class" name and reiterated its buy rating. Shares have rallied 20.5% year to date and 26.9% over the past 12 months. Other Dow names trading at historically low P/E ratios with growth potential include Verizon , Johnson & Johnson , McDonald's and Salesforce . — CNBC's Fred Imbert contributed to the reporting.