,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 – – -'– -..- – -',

INVESTMINT SlCURITIES S….N FRANCISCO NEW YORK LONCS lEACH EUREKA FRESNO MODESTO OAKLAND STOCKTON BAKERSFIELD alYERSIDE lOS AN&ELES SACRAMENTO SANTA ANA VALLEJO SAN JOSE TABELL'S MARKET LETTER 35 WAll STREET. NEW YORK 5. N. Y. Digby 44141 The market leaders of the 1942 to 1946 advance were mostly in the so-called goods or consumer goods industries. They included the retail store stocks, liquors, textiles, moving picture, airline and other industries that more or less sell directly to the public. After a sharp better-than-average rise, they had an equally sharp drop from the May 1946 highs and continued their declining tendencies much longer than groups which had not participated to such a great extent in the 1942-1946 bull market. What is the outlook for these industries today For a long time I have avoided recommending issues in the consumer goods group. In October 1946, and again in May 1947 and February 1948, when the averages entered my 160-170 buying range, I did advise the purchase of this type issue in the above groups. My recommendations were mainly in the industries with a more favorable technical background such as the oils, metals, machinery, steels, teleVision, etc. However, upon examining the technical patterns of some of the consumer goods groups ad the individual issues therein, I discover that a great many individual stocks have ouilt up exceedingly attractive technical patterns. All of these consumer goods groups have apparently reached the downside objectives outlined by the broad 1946 tops. Their declines have been extremely drastic and it would appear that many of the issues have been thoroughly oversold. In addition, some of these groups have built up sizeable potential base patterns and with any change in the present market psychology would be in a position to move ahead rather sharply. This is true particularly of the retail stores, liquors and airlines. In some of the other groups it would appear that some further backing and filling is needed before any sizeable advance could take plae. I am listing below a number of issues in the above category, together with their 1946 highs and 1948 lows and their approximate present price. I believe all of these issues warrant attention as thoroughly sold out situations with excellent prospects for intermediate term price enhancement. 1946 High Allied stores American Airlines Bone. stores Burlington Mills City Stores Distillers Seagram Eastern Air Lines Federated Dept. stores Gimbel Inter. Tel & Tel Lowenstein M. & Sons McCrory Stores McLellan Stores Marshall Field Montgomery Ward Northwest Airlines Pan-American Airways Paramount Pictures Publicker Industries Schenley United Merchants & Mfgrs. 63 3/8 19 7/8 48 1/4 29 7/13 38 1/4 30 33 3/8 41 7/8 — 55 1/8 31 7/8 43 3/4 43 35 7/8 57 7/8 104 1/4 56 1/2 27 42 1/2 67 100 23 1/8 Adjusted for two-for-one split August 1946. 1948 Low 25 6 1/8 16 1/2 16 1/2 15 1/8 13 13 7/8 20 7/8 17 8 3/4 20 25 18 3/8 22 1/8 47 1/4 8 1/4 8 1/4 18 1/4 18 25 1/2 11 1/2 Approximate Present Price 28 7 16 5/8 11) 7/8 18 15 16 27 17 9 21 30 20 23 53 9 8 1/2 23 19 29 11 1/2 I ( , These issues are in industries that have already experienced a post-war adjustment period and are i.n a strong defensive position. December 22, 1948 EDMUND W. TABELL . WALSTON, HOFFMAN\& GOODWIN This memorandum Is not to have upon anlnIonrtemr.etsltoIn IOIne or believed be; all construed 0 an of the securities offM or IOIIc1tatlon of mentioned heroin. The foofrflelrsoltno9 bvy or tell any securitleJ. From material hal been prepared by feli.. bl. but not neceuarlly compl.'e, is not guaranteed liS ac.curate or final, and tim. to time Walston.. Hoffman' Goodwin may us as matte, of Information Oftl,. It Is based Is not Intended to fof9Clole Independent Inquiry.

—- – – – – – – – INVESTMENT SECURITIES SAN FRANCISCO NEW YORK. LONG BEACH EUREKA FRESNO. MODESTO OAKLAND STOCKTON BAKERSFIELD RIVERSIDE LOS AN&ElES SACRAMENTO SANTA ANA VALLEJO SAN JOSE TABELL'S MARKET LETTER STANDARD bTl!;J!;L ;Rnlr. COMPANY 35 WALL STREET, NEW YORK 5, N, y, Dlqby 44141 Standard Steel Spring has had an outstanding record in recent years with sales and earnings in a pronounced up trend because of favorable trade conditions and an aggressive management which has obtained new accounts, expanded the scope of operations, and which has also been able to obtain a good steel supply. 1948 sales will show about 48 in bumper output, 38i in springs, 12i in universal jOints, and the balance in miscel- laneous items, such as, steel grating, teads, etc. The company is strongly situated in the industry and, although the big three account for the major percentage of output, this concentration is not considered an unfavorable factor. Sales for this year will be approximately 48 million on which it is expected to show earnings close to 3.58 a common share. This would compare with sales of 35 million and earnings of 2.28 for the previous year. ' It is understood that this company is the only one in the industry capable of turning out in a single piece bumpers the size used on some of the 1948 and 1949 cars. Prospects are that results for 1949 should be equal or better than this year from a sales and profit standpoint. The Company is on a .25 quarterly dividend basis and recently declared a .25 yearend extra payable on the 27th of this month. At current prices of about 14 1/2 the stock gives a yield of nearly 7, exclusive of the extra dividend, and over 8 1/2 if figured on a 1.25 annual basis. The stock has been in roughly – the 11-17 range ever since mid-1946. It has built up a sizeable potential base pattern with a long term objective of 27-29 if the area is penetrated upside. First resistance would be encountered in the 19-22 range. The stock appears very attractive. White Sewing Machine is the second largest manufacturer of this type of equipment. Al- , though it ranks well behind Singer in sales, it nevertheless occupies a well-established position in the household sewing machine field and accounts for approximately 30 of industry sales. Deferred demand for sewing machines is still far from satisfied and principal outlets of the company hold large backlogs of unfilled orders. Its past earn- ings record has been spotty and no common dividends were paid until November 1, 1948 with a payment of .25 per share on the common after clearing arrearages on the preferred. Earnings for this year have been trending upward, having shown 1.83 per share on the common in the first quarter, 2.36 in the second quarter, and 3.00 in the third quarter for a total of 7.18 for the nine months ended September 30th. This compares with earnings of 1.70 in the like 1947 period. With preferred dividend arrearages out of the way the stock is now on an indicated 1.00 basis and, at current levels of approximately 18 3/4, gives a yield of 5.3. Quarterly payments of at least this rate are indicated. The stock has been in a relatively wide range during 1948. After reaching a low of 9 7/8 in February it rallied to 22 7/8 in June. This high almost equalled the 1946 high of 23 3/8. The November decline brought White back to the 16 area from which it has rallied. Both the 1946-1948 base areas and the May-November e-accumulation area lndlla1es an eventual price objective of above 30. The stock appears to be an interesting speculation. I.COinPER-BESSEMER CORP. Cooper-Bessemer is considered the leading producer of gas engine-driven compressors, sixth largest in the heavy diesel engine field, fourth largest supplier of diesel engines for locomotives, and produce about one-half of gas-diesel engines made in this c&untry. Products go mainly to the oil, gas, heavy chemical and marine fields, with exports' normally running about 15 of total sales and parts business running about 22. this company had rather a mediocre earnings record pre-war and its dividend record has been spotty, nevertheless finances have been greatly improved in recent years and large profits have raised working capital as of September 30, 1948 to a new high. Incoming orders and prospects indicate capacity operations for the foreseeable future and lIed orders, as of the third quarter of this year, were in excess of 17 million. Earnings for the first nine months of the current year were equal to 7.39 a common share compared with 5.79 in the like 1947 period. The dividend rate was recently raised from .25 to .50 quarterly, putting the stock on an indicated 2.00 basis. The present of approximately 26 1/2 gives a yield of 7.55. Cooper-Bessemer has been in a but gradual uptrend since the low of 13 in May, 1947. The mid–1948 high was 33. The stributional top built up during that period indicated a decline to 24 which was in November. A small base pattern has been built up in the 24-27 range and short term objective of 30-32. The longer term objective is higher. 24, 1948 EDMUND W. TABELL WALSTON , HOFFMAN & GOODWIN 'redThll memor.ndtmt I, Of shay. lin tnt.rest In soma to or b. all con.trved a, an of the Mel/rltl offer Of scllcltatlon of mentioned herein,'., offen to fore g olnQ b,uy!oralsellh0eturUfCUfit!t.al and tulfsM.sto UmmaetteWr eloltfofl!n..,foHfmoaHttomnanon' lyG. oo11dwIIinbamsa.dy If not Intendad to foreclose Indllp-dent Inquiry, upon informolltlCHI beli…..d renable bllt not necessarily comp II III, S no quara III .

;' INVESTMENT SECURITIES SAN FRANCISCO NfW YORK LONG lEACH EUREKA FRESNO MODESTO OAKLAND STOCKTON BAKERSFiElD RIVERSIDE lOS AN&ELES SACRAMENTO SANTA ANA. VALLEJO. SAN Jose TABELL'S MARKET LETTER l5 WAll STREET. NEW YORK 5. N. Y. Digby 44141 In a recent letter, I stated that it was probable that earnings in 1949 would be, on the average, 10 to 33 1/3 lower than 1948. This drop in earnings will be due either tb the deflationary effect of a slight drop in business or, in the case of further inflationary pressure, to higher taxes, controls and allocations. On the face of this, indications point to a rather ominous outlook for stock market prices in 1949. The popular sequence of thought is lower earnings — lowe stock market prices. Actually, this does not coincide with the experiences of past markets. Some illustrations might make this point clearer. For example, the rails showed their highest earni.ngs in 1942, the year in which they made their lows. Using Atchison, Topeka & Santa Fe for illustration, we find that earnings in 1942 were 27.79 and the range was 53-27i. In each following year through 1945, earnings declined but the price range was higher. In 1943 earnings declined to 21.11 but the high was 67i. In 1944, there was a further decline in earnings to 19.91, but the stock made a new high at 83i. In 1945, there was a sharp decline in earnings to 9.56 but another new high was reacod at 113i. Or take the relationship, or rather lack of relationship, between the earnings and price of Youngstown Sheet & Tube. In 1939 earnings were only 2.50 4ei.but the stock reached a high of 56 3/8. In 1940, earnings jumped to 5.96 but the year's high was In 1941, there was a further jump to 9.13, but the stock sold no higher than 42 1/8. For the next four years, earnings showed successive declines to a low of 4.12 in 1945. And yet the stock sold less than a point below the 1941 low of 29 and during the period reached a high above 70. All of che foregoing illustrate the point that, while earnings determine the ultimate price level of a stock, the drop or rise in actual earnjngs are quite o-l'ten discounted some time in advance. To use an old financiaj. cliche, The market is a barometer not a thermometer. Also because of market psychology, prices quite often reach unwarranted levels due to the extremes of optimis and pessimism. For the last two and a half years, the market has refused to discount sharply increased earnings on the grounds that these earnings were only temporary and that a recession in business must eveDtually take place. In other words, the market has been selling on the basis of slmrply reduced earnings and a return to a more normal supply and demand pattern in the business picture. It appears to this writer as rather illogical to believe the market will doubly discount the expected by a further sharp drop in values. In fact, the reverse could happen and once the expected has happened, the fear and peSSimism of the past to and a half years could be replaced with a psychology of optimism based on sustained normal earning power. This is in line with the historical precedents of past post-war periods where, after a re-adjustment period, there has been a long period of above average business interrupted by only relatively minor periods of correction. In a well liquidated stock market with abnormally small borrowing and no top heavy inventory on dealers' shelves, there seems to be little reason for a market crash regardless of a possible slight decline in earnings. I repeat my forecast for 1949. The lows of t;le year will be made in the first three months. The low may be above the November, 1948, low of lTl. It certainly will be above 160. The latter part of the year will witness a possible testing of the 1946 high of 213. The ultimate objective for the next major advance is 240-250 to be reached possibly in 1950. December 29, 1948 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This have manem'o,,r'aarnednumIn Il,Onmoet to or upon information believed b. eormruod es an offer or solidt.tlon of offers to buy or lell any securities. From all of the reUabie securTtio. mentioned but not necessarily cho.m..p.llne.teT,heIs10n'o9t01'C1l1arm.nattoeerdiaal s h bMn accurate prepantd by or linal, lind tIme to time W.!llrton Hoffmltn & Goodln may us .s a matter of InTormatl,!n only. It II based II not intended to foreclose lAde pendent Inquiry,