Tabell’s Market Letter – December 17, 1948

,11- ,-j – – – – , – INVESTMENT SECURITIES SAN FRANCISCO. NEW YORK LONG BEACH. EUREKA FItESNQ MODESTO OAKLAND STOCKTON BAKERSFIELD RIVERSIDE. LOS ANGELES. SACRAMENTO SANTA ANA. VALLEJO SAN JOSE TABELL'S MARKET LETTER 15 WALL STREET, NEW YORK 5, N, Y. Digby 44141 '/…. In the last letter, my forecast of the general. market pattern for 194was that the averages would reach their low point for the year in the first three months and that the low would be not much, if any, below the November 1948 101, of 171, and certainly above 16o, I stated that the market during the latter part of 1949 should approach or pass the 1946 highs of 213. The ultimate objective for the upward move is 240-250 in the Dow-Jones industrial averages. This objective could be reached in 1950 I further stated that the rise will be selective and will not include all groups. After selecting the best groups, the issue is further compli- cated by the act that many issues in the group show quite diverse patterns. This, of course, has also been true in the past, but this extreme selectivity is even more evident today. However, from a technical viewpoint, the group that offers the best price appreciation possibilities for the coming year is, in my opinion, the railroad group. The ail average has very strong support below the market in the 52-50 range. This range was also the downside objective of the May-July distribution area. As for individual recommendations, in the better grade group, I prefer Atchison, Topeka & Sante Fe, Kansas City Southern, Illinois Central, Delaware & Hudson, Atlantic Coast Line, Southern Railway, Southern Pacific and Reading Corporation. In the more speculative group Denver & Rio Grande, Chicago Rock Island, Western PacifiC, st. Louis-San Francisco, Gulf, Mobile & Ohio and Seaboard Airline. I also believe that some of the reorganization rail- road preferred such as Chicago Milwaukee & St. Paul preferred, Denver & Rio Grande preferred, Seaboard Airline preferred, st. Louis-San Francisco preferred and – Chicago North West preferred, are in an attractive pOSition both for appreciation possibilities and extremely high yields. As a special Situation, I believe Western Maryland common is a speculative purchase. The secondmost favorable group are the building issues-, including- — some of the cement stocks. My recommendations are American Radiator, Holland Furnace, Celotex, Flintkote, Masonite, Otis Elevator, Alpha Portland Cement, Lehigh Portland Cement and Pennsylvania Dixie Cement. The third most favorable classification is the merchandising group, particularly the issues of the variety chain type. Issues that appear attractive in the retail group are Marshall Field, Federated Department stores, J.C.Penny, McCrory stores, McLellan Stores, Montgomery Ward and Sears Roebuck. As a depressed group about ready to turn the corner, I consider the airline issues to have interesting upside potentialities, although any important rise may be delayed for a while. I consider American Airlines, Eastern Airlines and Northwest Airlines as interesting long term speCUlations. There are other groups that have favorable technical patterns, but rather than go into them individually, I am listing a number of individual issues that appear to offer interesting appreciation possibilities Avco Corporation Burlington Mills Chain Belt Cooper Bessemer Electric Power & Light Elliott Company Firth Carpet Foster Wheeler Fruehauf Trailer General Railway Signal Inter. Minerals & Chem. Joy Manufacturing Kelsey Hayes Wheel Mueller Brass December 17, 1948 Plymouth Oil Radio Corporation Schenley Distillers Sharon Steel Shell Union Oil Smith (A.O.) Standard Steel Spring Superior Steel Sylvania Electric U.S. &Foreign Securities U. S. Pipe Wheeling Steel Youngstown Sheet & Tube EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN Thts fMlTIOfondum 11 not to rhave an lntllf'fllf In some or upon information bellll…ed ab,leelliocafobnltltaflerubesuedtcuanrliotaliensneomcfeefesnsrtaioorinrleysdoclhioeemrtetaplntlleotneT,hoef,tSfoofnrfeoegtnoigtnuogarbaumnytaetoeerrialaleslhl alac-cubrealoetnecuoprltrt'iefeisnM.eal,Fdroamnbyd timI e.to t,imm.arWJal'1fofoeclosreoinnd0.p1Gdietntlitn,qauiry. IS no !n en ' 0 – – -'– -..- – -',