Viewing Month: May 1949

Tabell’s Market Letter – May 04, 1949

Tabell’s Market Letter – May 04, 1949

Tabell's Market Letter - May 04, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5. N. Y. Digby 4-4141 With the newspaper headlining falling metal prices, increased unemployment, lower carloadings and other indications of the business readjustment, it would seem that the market must obviously—-also reach lower levels. This is the reason for the large short interest and also the reason why stocks are selling at near the lowest price to earnings ratio in history. The only flaw in this reasoning is the fact that the market has been discounting the present transition from a war to a peace economy for most of the last two and a half years. If the market has discounted a moderate recession in bUSiness, what other factors are holding it back The happening that halted the upswing in 1948 was the Russian blockade of Berlin. The happening that broke the market in November was the election of Truman and the fear of drastic tax increases, labor law repeal, controls, and social legislation. It now appears that the Berlin blockade will be lifted shortly and that Congress, by its recent voting record, will not enact any great part of the much feared legislation. The blockade and the fear of social legislation were known on November 30th when the Dow-Jones industrial average reached a low of 170.35. The bUSiness recession has occurred since that time. Yet, regardless of the receeding business pattern, the market has held above the November lows as witness the table below Date June Sept. Oct. Nov. High 194.49 190.88 182.50 Low 175.99 170.35 March April 179.19 172.64 It will be noted that while, since January, each high has been below the previous high the lows have held since November. It would appear that the market has already discounted a business de- pression of greater proportion than we have yet witnessed. Removal of the fear of the blockade and Congressional action could result in a strong upward move if the investment public feels that the business drop will not be as severe as anticipated. Ability to-pass 179.19 would be an indication that such is the case. MalJ 4, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN Thl, memorandum I, not to b. c.on,trUfld as an offer or solleltatlon of offen to buy or sell any s.curitles. From time to tllM Walston, HoHman & GoodwIn may kev. on interest In some or all of the '.cuTHlel mentioned hereTn. The foregoing material has bun prepared by tIS 1 a matter of Information only. It b baled upon Information belleved reliable but not necessarlly complete, Is not Quarnteed as I!Iccural. or final, and Is not Intended to foreclose Independent Inquiry. –

Download PDF

Tabell’s Market Letter – May 06, 1949

Tabell’s Market Letter – May 06, 1949

Tabell's Market Letter - May 06, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 4-4141 On May 2nd, U. S. Steel stockholders approved the proposal to split the common stock three-for-one. The stock will be split on May 12th so holders of the stock before that date will participate in the splitup. On the basis of the current market of approximately 72, the price of the new stock will be around 24. Assuming a minimum dividend of 2 annually on the new stock, the yield would be 8.3. Earnings for 1949 are expected to be between 3.50 and 5.00, indicating the possibility of an even higher dividend rate than 2. First quarter earnings, on an ad- justed basis, were 1.66 but it is doubtful if earnings will be maintained at that pace for the entire year. Comparison of the new U.S. Steel stock, at a price of 24,with other steel issues selling around the same price range brings out some interesting points Armco Steel Bethlehem Steel Jones & Laughlin Republic Steel U.S. Steel Approx. Price 24 1/2 30 27 22 24 1948 Earn. 8.00 9.36 12.01 7.61 4.00 1948 Div. .OO 2.40 2.00 2.00a 2.00 Yield 8.1 8.0 7.4 9.1 8.3 1946 High 33 5/8 38 1/4 53 7/8 40 7/8 32 1/2 1942 . Low 7 7/8 16 1/2 17 1/2 13 3/4 14 3/4 a. Plus 4 stock. On adjusted basis and indicated dividend rate. On a yield basis, the new U. S. Steel stock will compare favorably with all the other issues. Considering the fact that it is the outstanding leader in the industry, it appears undervalued on such a basis. It is true that U. S. Steel is selling at a higher price-to- earnings ratio than the other issues but it would also appear that,even in this extremely volatile industry, its, earnings are less subject to Wide swings than the other issues in the list. It is also true that the other issues, if they all returned to the 1946 highs, would show better percentage appreciation. However, U. S. Steel selling in the 20's will have a much larger speculative following than when it was selling in the eighties and nineties. In the event of an upswing in the market, it should be the first issue in the group to sellon a 6 basis. From a defensive viewpoint, it would appear less vulnerable than the other issues in the list. In the highly improbable event that all issues returned to their 1942 lows, U. S. Steel would perhaps show the least percentage depreciation and, due to its relatively better financial condition, maintain its dividend longer and at a higher rate. From a technical point of view, U. S. Steel has a better chart pattern than the other issues for both the long term and for shorter term trading. I advise switching Armco, Bethlehem Steel, Jones & Laughlin, Republic Steel into an equivalent money amount of U. S. Steel. A switch out of some of the other more speculative lower- priced steel equities into U. S. Steel is also advised for those who wish to upgrade their holdings. EDMUND W. TABELL WALSTON HOFFMAN & GOODWIN nThis memOflindUm I, not to b. construed a. an off.r or IOltcitatlon of off.n to buy Of en, curltl. From time to filM Walston. Hoffmu , Goodwin may have an Int.r.st Tn 10m. or all of the securltl mentioned h.,..ln. The foreqoln9 mat.rlal hal been prepared by UI al matter 01 Information onlY'd It Is baled 0'upon Information believed reliable but not necenarlly complete, Is not Quarenteed es aexurate fine I, and Is not Intended to foreclose Indepu ent Inquiry.

Download PDF

Tabell’s Market Letter – May 11, 1949

Tabell’s Market Letter – May 11, 1949

Tabell's Market Letter - May 11, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER 35 WAll STREET, NEW YORK 5, N. Y. Digby 4-4141 The indices of bUSiness started to show a pronounced declining trend around the first of the year.' It has been eVident to everyone for the past two or three months that the i'nflationary pressure has subsided and that we are in a period of bUSiness readjustment. Yet in the face of this, the market, as portrayed by the Dow-Jones industrial average and the various other combined averages, has held above the November 1948 lows and substantially above the lows of 1946, 1947 and February, 1948. Of course, this is not true of individual issues. A great many stocks have recently made new lows for the last three years. This is indicative of the peacemeal readjustment that has been going on for the last . thirty-three months. For example, last week 118 stocks on the New York Stock Exchange made new 1948 highs. During the same period of time, 149 stocks made new 1949 lows. Also, as an example, Chrysler and Allied Chemical & Dye reached their lows in October, 1946, Allis Chalmers reached its low in October, 1948, American Air Lines in September, 1948, American Cyanamid in February, 1948, and Southern Pacific and Atchison, Topeka & Santa Fe in May, 1947. This has been also true of the general business picture, with some groups making their earnings high in 1946 and others in 1947 and 1948. The market has been discounting what is happening today for the last two and one-half years. Fears of a business recession have kept stock prices at a level where they are selling at price-to-earnings ratios and yields that were obtainable only in such depression periods as 1932, 1937, and 1942. For the last ten weeks the market has held in a relatively\arrow trading range.XThe implications are quite clear.A joint advance of the two averages through 179.19 and 49.86 will signify that a move of major importance is under way. On the other hand, a joint penetration of 170.35 and 46.04 would indicate a further extension in the intermediate decline which has been in effect since mid-1948. However, underneath these lows are' the three-year support Xlevels of 160-165 and 41-42 for the rails. My technical work indicates that the market is very rapidly reaching a sold out condition. Some further pressure may be required, but it would appear that we are near the start of an important upside move. May 11,1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN T1I.I, memorandum b not to b. conltrued iIIl an off.r or IOUcltatioll of off. to buy or 11 411, .Ieurltl… From tim. to ttme Wllrton, HoHman I Goodwin may lin. an Int.,..t In lome or all of the 'Icurl.!.. mentioned he,..ln. Th. for'aolnQ fNlt.rI.1 h b..n prepared by us .t a matte, of Information ant,.. It I, baled upon Information believed ,.lIable but not nle.uatily compl,t., Is not auaranteed' II accura or final. and Is not Tntended to foreclose Independent InquIry.

Download PDF

Tabell’s Market Letter – May 13, 1949

Tabell’s Market Letter – May 13, 1949

Tabell's Market Letter - May 13, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER lS WALL STREET, NEW YORK S, N. Y. Digby 4-4141 '4 ','In the event of a sharp upswing in the market, someof the issues which have suffered the greatest decline will undoubtedly have a substantial rebound 0 This is particularly true of some of the low-priced stockso With this idea in mind I am listing below a group of stocks selling under 15 a share that have declined to a price of less than one-third of their 1946 high. All of these issues are extreme speculations and should only be purchased by those in a position to assume large risks in the hope of above average profits. I have attempted to select only those issues that at present prices are not out of line with their pre-war price range and which have at least the beginning of a potentially constructive technical pattern.. '\ Last Aldens, Inc 0 14 5/8 Amero& Fgn Pr.2nd pf 8 1/4 American Stove 8 1/2 Baltimore & Ohio 9 1/2 Braniff 7 1/2 Budd Co 9 Capital Airlines 7 Columbia Pictures 11 East.Stainless Steel 10 1/8 Evans Products 7 7/8 Gar Wood 5 GenoPrecision 13 5/8 Newport Ind. 10 Northwest Airlines 9 1/4 Radio-Keith-Orpheum 8 1/2 Sun Chemical 6 1/2 Symington Gould 4 1/2 Twin Coach 5 1/2 Western Airlines 6 7/8 .1945-' 1946 High 51 3/4 44 1/8 38 7/8 30 1/4 37 1/2 26 3/8 49 3/4 36 3/1t 61 33 3/4 29 3/8 40 1/2 1t5 63 1/2 28 1/8 24 1/4 16 7/8 26 1/2 40 1/2 1949 Low 13 1/8 6 1/4 8 1/4 8 1/2 6 5/8 8 1/8 5 1/4 7 3/4 9 3/8 7 1/4 5 12 3/4 9 1/8 8 1/2 7 5/8 7 1t 1/4 5 1/8 5 May 13, 1949 EDMUND W0 TABELL WALSTON, HOFFMAN & GOODWIN Thl. memor5ndum Is not to be con.trued a. an offer or sandlatlon of offen to buy or sell any securities. From time to time Walston, Hoffman I Goodwin may have an Intered In .ome or all of the securities mentioned herein. The foreQolnQ materIal hal been prepared by us as a matter of Information only. It I. based upon Information belieyed reliable but not necenarlly complete, Is not quaranteed as accurate or final, and Is not Intended to foreclose Independent InQuiry.

Download PDF

Tabell’s Market Letter – May 18, 1949

Tabell’s Market Letter – May 18, 1949

Tabell's Market Letter - May 18, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER 35 WAll STREET, NEW YORK 5. N. Y. Digby 4-4141 There is no change in the market pattern. The market still re- mains deadlocked in the trading range of fifteen weeks duration between 170.56 and 179.19. In my opinion, the chances favor a nearby upside penetration of the trading shelf. . Listed below are the issues in my recommended list, together with their approximate price level at the time of their original recommen- dation. Electric Power & Light, which was originally recommended at 21 and is now selling at 26, is dropped from the list as stockholders will shortly receive their distribution of United Gas Corporation and Middle South Utilities, Inc. This list as a whole has shown better, than average market action. CloSing Approximate Originally 5/18/49 Recommended Level American Cyanamid 43 36 1/4 American Home Products 29 25 1/4 American Power & Light 10 1/4 9 3/4 American Seating 29 3/4 27 A.vco 67 Bendix AViation 31 3/8 32 Bigelow Sanford 24 3/4 28 3/4 Borg Harner 44 3/4 48 Brooklyn Union Gas 29 26 1/2 Cities Service 47 5/8 40 Commercial Credit 51 1/4 51 . Commonwealth & Southern 4 3 1/2 (a) Cooper Bessemer 34 1/4 26 7/8 Denver Rio Grande 26 24-27 Eastman Kodak 43 3/8 44 Eastern Airlines 15 15 3/8 Federated Dept. stores Firestone Tire & Rubber 28 49 1/4 27 1/2 46 Firth Carpet 12 5/8 16 1/2 Flintkote 24 1/4 24 3/4 Fruehauf Trailer 19 1/8 19 3/4 Hewitt-Robins 17 3/4 17-19 Holland Furnace 21 3/8 22-24 International rUn .& C 28 1/4 25 1/8 Intertype Corp 28 26 Johns Manville 35 1/2 36-34 Joy r1anufacturing 38 35 Kre sge (S. S. ) Lowenstein 39 1/2 22 3/4 36 3/4 .'. 22 1/2 Niagara Hudson 10 3/4 9 Paraffine Companies 17 7/8 17 1/4 Penn-Dixie-Cement 22 1/2 19 1/4 Phelps Dodge 41 3/8 42-38 Pressed Steel Car 6 6 1/2 Radio Corp 11 3/4 11-13 Reynolds Metals '22 1/4 21 St. Regis Paper 7 1/8 7 3/4 Schenley 25 3/4 26-30 Sears Roebuck Shamrock Oil & Gas 37 3/4 27 3/4 39 31 Sharon Steel 29 33-35 Shell Union Oil 35 37-33 Sperry Corp 26 26 Standard Steel Spring 14 7/8 14 1/2 Studebaker Sylvania Electric 20 21 3/4 19 20 3/4 Sunshine 'Iining 9 3/8 10 Jheeling Steel 40 1/4 42-44 White Sewing Machine 23 19 1/2 Youngstown Sheet & T 64 1/2 66 (a) Hill go ex-dividend 50 stock June 7th. Offered by Prospectus only. I.lay 18, 1949 Em1UND W. TABELL 'wALSTON, HOFFMAN & GOODWIN m,Thll memorandum II not to b, c.onstnlld l1li1 an offer or IOUcltatlon of offll'l to buy or .111 flY s.c.urltl.s. From time to fl,ml Walnon. HoHman & Goodjlnb ma he…. an Int.rlHt In some or all of the securities mentIoned hereIn. 'or'901n4 met.rfal hili been prepared by us al a matter of Information only. It ale upon Informetton bell.ved …lIable but not necessarily compl.t., 11 not Quaranteed al aecurat. or final, and II not Intended to foreclole Independ.nt Inquiry.

Download PDF

Tabell’s Market Letter – May 20, 1949

Tabell’s Market Letter – May 20, 1949

Tabell's Market Letter - May 20, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5. N. Y. Dlgby ….. 141 The market continues its aimless flu'ctuations in a gradually narrowing range. This is evidenced by the table below Date High Low June 194.49 Se2t. 175.99 Oct. 190.88 Nov. 170.35 Jan. Feb. 182.50 170.56 March A2 rll 179.19 172.64 The range in May has added to this pattern with a hgh of 177.18 and a low reached on Friday of 172.86. Lines connecting the highs and lows since' October-November are very near to approaching an apex. It would appear quite evident that within the near future we will witness a sharp move out of the gradually narrowing range. QUite obviously, the breakout could be in either direction. However, several indicators point to the conclusion that the penetration will be on the upside. In the first place, it must be remembered that the low point in the industrial average was reached in November. Since that time there has been increasing evidence of a deflationary trend in business. In the face of this, the industrial average has held above its previous lows. Sentiment today is at the lowest level in a long while. This is evidenced by the fact that the short interest is at the highest level since 1933. Measured in terms of present average volume, approximately 800,000 shares, it would take two full trading days to cover this short interest of 1,628,000 shares. On only five other occaSions in the past seventeen years has the short interest been at this high ratio. The first occasion was in the first six months of 1932 when the industrial average reached its low of 40-56 and was followed by a rally to above 80. The second occasion was in the early part of 1933, at the time of the bank holiday. Following this, the industrial average rallied from approximately 50 to 110. The third occasion was in the early part of 1938 and was followed by a rally from approximately 100 in the averages to 155. The fourth and fifth occasions occurred in late 1947 and early 1948 and was followed by a rally from 165 to 194. Two other indicators leading to the possibility of an uside breakout are (1) The gradual increase in odd lot sales, and (2) The better action of investment issues as compared to the speculative group. To repeat from my letter of May 11th – The implications are quite clear. A joint advance of the two averages through 179.19 and 49.86 will signify that a move of major importance is under way. On the other hand, a Joint penetration of 170.35 and 46.04 would indicate a further extension in the intermediate decline which has been in effect since mid-1948. How- ever, underneath these lows are the three-year support levels of 160-165 and 41-42 for the rails. ' May 20, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN nThl. memorandum I. not to be constraed al an offer or solldlatlon of oHert to buy or an!, curltl… Ftcm tim. to tlrM Waldon, Hoffman & Goodwin may he…. an Interest In lome or all of the lee.urille. mentioned h….ln. The 10r8401nQ mat.rlal hill een prePfifed by UI a. a matt.r of Information only. It Is baled upon Information believed r.nabl. ,but not nachllltn, compl.te, Is not Quaranteed 41 accuret. or nnal, lind fa not In'ondld to forlclose Indlplndent InqUiry.

Download PDF

Tabell’s Market Letter – May 25, 1949

Tabell’s Market Letter – May 25, 1949

Tabell's Market Letter - May 25, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER 35 WAll STREET. NEW YORK 5, N. Y. Digby 4-4141 The decline of the past seven days was at least temporarily halted at the February lows of both the industrial and rail averages. B0th averages at the moment present the same pattern, namely, declining highs and equal lows. The following table illustrates the pattern Date High Low June 194.49 Sept. 175.99 INDUSTRIALS Oct. Nov. Jan. 190.88 182.50 170.35 Feb. 170.56 March 179.19 170.57 Date High Low July 65.23 Sept. 57.42 Oct. 62.37 RAILS Nov. Jan. 54.93 51.69 Feb. 46.04 March 49.86 46.11 The only difference in the two patterns is in the fact that the industrials have held at the same point on three occasions while the. rails have held twice. At Wednesday's closing levels of 171.84 and 46.76, both averages had pulled moderately away from the day's lows. Obviously, ability of both averages to hold above the February lows would be extremely constructive. This would be particularly true in the case of the rail average. The rails were the weak sisters of the market until February but have shown better action since that tir.1e. Ability to hold above the previous low, regardless of the'action of the industrials, would indicate that the rails had completedl their correction. The present decline has been led by the steels and the motors. these industries have, as yet, to go through are-adjustment period. Possibly the present decline has overdiscounted this possibility. The steels on several occasions have been the last to participate in a market trend. While the industrial average reached its high in June, 1948, the steels made their high in October. The fact that the steels have reached new low territory while the average has held is another example of this trait. . The piece-meal readjustment of a return to normalcy is exemplified by the diverse action of individual'stocks and groups. While the steels and rails are weak and other issues are reaching new lows for the past three years, and the averages are near their lows for the year, it is interesting to note the action of the first three stocks on our recommended list. American Cyanamid, which, reached its low of 33 1/4 in February, 1948, closed at 41 778 as against a 1949 high of 43 3/8. American Home Products, which reached its low of 20 7/8 in February, 1948, closed at 28 3/4 as against a 1949 high of 29,and American Seating, which reached its low of 15 1/4 in May, 1947, closed at 29 7/8 against a 1949 high of 30 1/2. This diverse action will undoubtedly continue until each segment of our economy becomes adjusted to a normal peace-time pattern that will undoubtedly be at a level considerably above pre-war. As to the action of the present market,ability to hold above the February lows would undoubtedly cause conSiderable concern to the large short interest. On the other hand,while a penetration of the February lows would undoubtedly cause some scared selling,any price decline that may occur should prove temporary. My advice since October,1946 still holds. The' 170-160 area is a long term buying range. Recent action makes it appear doubtful that this range will again be entered. May 25,1949 EDMUND W.TABELL WALSON, HOFFMAN & GOODWIN Thil memorandum h not to be eonltru.d iIIl' an off.r or solicitation of off.rs to buy or 1.11 any I.curltl.s. From tIm. to tim. Weldon, Hoffman & Goodwin may haY. an Interest In some or all of the curltl mentioned h.r.ln. Th. fot.;oln; mat.rlal hal been prepared by us as ill matter of Infonnaflon only. It Is bas.d upon 'nformatlon b.II….d rellabl. but not n.c.uarily complte, Is l'Iot quaranteed al eccurate or flnlll, and Is not Intended to foreclose Independ.nt Inquiry.

Download PDF

Tabell’s Market Letter – May 27, 1949

Tabell’s Market Letter – May 27, 1949

Tabell's Market Letter - May 27, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER 35 WALL STREET. NEW YORK 5. N. Y. Digby 4.01141 I wonder if too much importance isn't being placed on the ability of the averages to hold or break through 170 in the industrial average and 46 in the rails Of course, it would be distinctly encouraging if these points would hold but actually, except from a timing viewpoint,there would be no long term significance in a downside penetration. It must be remembered that the 170-160 area in the industrial average has been entered on numerous occasions in 1946, 1947,and 1948. The industrials have been fluctuating in a relatively narrow trading range of 15 between 160 and 195 for thirty-three months. The low in October, 1946 was 160.49, the low in May 1947 was 161.38, and the low in February 1948 was 164.07. During the time the average was in the 170-160 range over the last three years there were many millions of shares of stock turned over. Therefore, this area is one of strong support. Ability to hold above it is distinctly encouraging, but the fact that it may be entered will be no indication that this support area will not again hold. After reviewing the graphs of the more than twelve hundred individual stocks in my technical portfoliO, I am amazed at the multiplicity of patterns. At first glance, it appears that there is no one set design that could be applied to the confused indications between various groups of stocks and even of individual issues in the same group. Yet, after a second glance, an overall pattern is discernible from the time that the distributional top of early 1946 was formed. The seeming confusion lies in the fact that the market has not moved as a unit in either velOCity or timing any more than has each segment of business so moved in the post-war adjustment. Standard & Poor's Outlook recently published four charts show- ing the diverse action of various industry groups during the period of preparation for war, anticipation of peace, anticipation of boom, and anticipation of the end of the boom. These charts very clearly illustrate the rotation of leadership among the different groups during these four phases. The present phase is the road back to normal competitive conditions. Some industry groups have already completed this re-adjustment and are on the way back. This process has been going on in the market since 1946. It is nearly completed. Forgetting the headlines, the gloom, the uncertainty and the fears, and looking at the record, we find the following (1) Every time stocks have been available at present priceto-earnings ratios and present stock-to-bond yields, the sequel has been a sharp upward move. (2) Every time in the past that the ratio of short sales to volume of trading has been at the rate of two days short pOSition, the sequel has been a sharp upward move. (3) The market has held in a trading range of 15 for thirtythree months. Every narrow trading range of this duration has been followed in the past by an upside penetration. This does not necessarily suppose a sharp upward move will start next week. It COUld, but maybe it will be a month or even six months before it occurs. In the meantime, many stocks have already made their lows of the readjustment. Some were reached in 1946, and some' in 1947, 1948, or last week. I suggest that it would be wiser to watch these individual issues rather than to worry about the industrial average and whether or not it enters a range that has been a buying point for thirty-three months. EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN TtlI, memorandum I. not to b, conJtra,d a. eft off.r Clf solldtatlon of offers to buy or ,.11 any curltl… From tim. to tim. Wellton, Hoffman & Goodwin may have fin Int.r.d In some or all of the securitl m,ntloned her,ln. Th, for.;olnt mat.rlal hal b.,n prtpared by us a. a matf1lr of Informallon only. It I, ba.ed apon Information b,n..d rtllebl. but not nac.lI4rUy complete, Is not Quaranteed al accura.. or rlMI, end II not Intended to foreclole Independ'nt Inquiry. 1

Download PDF