Viewing Month: January 1951

Tabell’s Market Letter – January 05, 1951

Tabell’s Market Letter – January 05, 1951

Tabell's Market Letter - January 05, 1951
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… 'Walston.Hoffman &, Goodwin NEW YORK 5. N. Y 35 Wall Streot DIGBY 44141 PHILADELPHIA 2. PA. 1420 Walnut Street PENNYPACKER ss'm TABELL'S MARKET LEnER LOS ANGELES Il. CALIF. 550 South Spring StrOl!t MADISON 93232 SAN FRANCISCO 4, CALIF. 265 Montgomery Street SUTTER 12700 The Dow-Jones industrial average decisively penetrated the long 236-220 range in which it had held for over three months to reach a high of 242.60 on Friday. The rails hit a high of 80.000 As noted in my letter of two weeks ago, an upside penetration of this area indicates an advance into the 240-250 range which was my maximum upside objective for 1950. At Friday's close both the short term and intermediate term indica- tors were in overbought territory. This is to be expected after an advance', of twenty points in the industrial average in the past sixteen trading days. At the moment, the public is eager to buy stocks at the highest level in twenty years. The fact that earnings and dividends for many companies most likely reached a peak in 1950 because of taxes, is ignored by the security buyer. His reasoning is that we now have a 501 dollar that . will be worth ess in purchasing power as the defense program expands This reasoning is good but may be premature by a year or two. Because of . the defense program, the government will do everything in its power to hold down the inflationary potential and thus keep down the cost of defense. We have actcally hac ,'. 501 dollar for the last few years during which time the averages sold as low as 160. It now seems hardly the tiI)le to initiate new purchases. Would rather buy when there is less competition on the buying side as during the various times this letter strongly recommended the purchase of stocks in the 160-170 range and again at 195-200 last July. With the public in a strong buying mood, the market could undoubted- ly work somewhat higher over the near term However, the risks of loss in a heavily invested position at this stage seem to outweigh the possibility of further wide appreciation. Would continue to exercise caution and have a large portion of trading funds liquid to await bargain levels. I believe the present market is much nearer the top of the 1951 range than the bottom, This letter has recently been advising the sale of individual securities in our recommended list that were purchased considerably below present levels. Some further profit taking is suggested belowo The figure in parenthesis is the originally recommended level and the last 'figure is Friday'S close. BETTER GRADE ISSUES American Home Products (25) 31 3/4 Standard Oil of Indiana (48) 62 5/8 Union Pacific (87) 106 1/2 MEDIUM GRADE ISSUES Burlington I'lills' (21) 31 7/8 Chicago Pneumatic Tool (28) 42 7/8 Chicago, Rock Island (28) 52 7/8 Distillers-Seagram (15) 28 3/4 International Minerals (17) 27 3/4 SPECULATIVE ISSUES Bohn Aluminum (25) 36 1/2 Budd Mfg. (9) 16 3/4 January 5, 1951 ClOSing Averages Dow-Jones Industrials Dow-Jones Rails 240.98 79.12 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN Thil memorandum II not to b. constru.d at u off.r or lolIcltation of off.rs to bllJ' or 11 any curlll. From tIm. to time Waldon, Hoffman & Goodwin may hll …. an Int.,.. In 10m. or all 01 the curltl mentioned h.reln. Thl fOI'901n9 mallrial has bien prlpar.d by UI a. a mattlr of informatIon only. It h. blls.d uoon informaflon b.II…..d rellebl. bllf not nlc.narlly compl.t., II not 9ullr.m..d as accurat. or final, and II not Int.nded to foreclose Indo pendent Inquiry.

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Tabell’s Market Letter – January 12, 1951

Tabell’s Market Letter – January 12, 1951

Tabell's Market Letter - January 12, 1951
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———————————————————————- . Wolston.Hoffrn,on &, Goodwin NEW YORK 5, N. Y 35 Wall Street DIGBY 4-4141 PHILADELPHIA 2, PA 1420 Walnut Street PENNYPACKER SS'i'77 TABELL'S MARKET LETTER LOS ANGELES I J, CALIF 550 South Spring Street tv! AD ISO N 93232 SAN FRANCISCO 4, CALIF. 2bS Montgomery Street SUTTER 12700 \ The industrial average pushed into the upper part of the 240-250 upside objective to attain a high of 245.87 on Fridayo The rail average also reached a new top at 83.01.. The graphs of individual issues continue to show extreme diversity. Some issues indicate moderately higher levels for the near term as well as considerably higher levels for the longer term. Other issues have reached their upside objectives and many of these have already formed distributive tops and could decline sharply. The apparent reason for the recent strength has been inflation or a flight from the dollar. This reasoning may be premature. Inflation in some form and higher earnings will ultimately result in the market reaching a higher level than 1929, but this will not happen in the next year or two. Inflation, at this time, is the last thing the government desires. It would greatly increase the dollar cost of the defense program. So far, the steps taken to halt inflation have been relatively mild. They could, and undoubtedly will, become more drastiC. In my opinion, the main motivating force in the market, for the next two years, will be earnings and dividends, not inflation. With a large defense program, earnings before taxes will be at a high level for most companies, but earnings after taxes will tell the storyo The new tax bill is relatively mild. The normal tax has been raised from 38 to 47. All earnings above 85 of the average earnings of the three best years of the 1946-1949 period will be subject to a 77 excess profits tax. In no event shall more than 62 of earnings be taxable. The impact on individual companies will be quite diverse as illustrated below in the amount a company can earn before being subject to excess profits tax. Company Price Atlantic Coast Line 71 Jones & Laughlin 53 National Supply 22 New York Central 24 Pacific Mills 46 EPT Exempt . . Company Price 21.00 AllieChemical 60 7.90 Amer.Cyanamid 74 5.07 duPont 85 8.50 General Elec. 51 9.05 National Lead 68 EPT.Exempt. 3.18 3.23 3.00 3.38 3.06 These estimates are crude and are not accurate. They are based sim- ply on 85 of the best three-year average and do not include many relief provisions in the new tax law such as credit for capital additions, etc. The rail exemptions are based on invested capital provisions rather than average earnings. Despite the approximations, they are roughly indicative of the situation. The airlines and utilities, due to special exemptions, are also relatively favored. A further increase in taxes is being conSidered. This might possibly ,7r0esuoltf in a 55 normal tax and pre-tax earnings. This an 85 excess profits tax, and a limit of obviously would result in lower earnings for both groups outlined above. The stocks most vulnerable to taxes are the better grade stocks that are components of the various averages. A decline in these issues could cause a severe decline in the Dow-Jones Industrial Average and bring the more favorably situated issues temporarily below present levels. Continue to advise caution and profit-taking on strength and await reactionary periods to add to holdings of favored issues. January 12, 1951 Closing Averages Dow Jones Industrials Dow Jones Rails EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN 243.81 81.63 Thi! memorandum Is not hi an Int.r.st In some to or bt all constru.d an offer Of' lollcltatlon of of tile securities mentioned h.r.ln. The offers to bur or ,en any ,kurlll. From tim. to time Waldo,, Hoffman foregolnq mate,lal hat bn prepared by us IS II matter of Information o&nlYG'dolotdwIsinbameady ueon Information b.lleyed reUable but not neussartl, complete, Is not QUarentMd al .accurate or final, lind Is not Intended to foredo,. Indepen ent inqUiry,

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Tabell’s Market Letter – January 19, 1951

Tabell’s Market Letter – January 19, 1951

Tabell's Market Letter - January 19, 1951
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Walston.Hoffman &, Goodwin NEW YORK 5. N. Y 35 Wall Street DIGBY 44141 PHILADELPHIA 2. PA 1420 Walnut Street PENNYPACKER 55917 TABELL'S MARKET LEnER LOS ANGELES 13. CALIF 550 South Spring StrMt MADISON '13232 SAN FRANCISCO 4. CALIF 265 Montgomery Street SUTTER 1-2700 The industrial average at Thursday's high of 249.07 had reached the upper range of the 240-2S0 upside objective outlined by my technical work. The intermediate term indicator, which gave a buy signal late in December at 234 in the Dow-Jones industrials, has entered overbought terri- tory. A sell signal has not yet been given but the formation suggests that a sell indication will be given some time within the next week. First sup ort would be met at the 236 level. Regardless of the broad implications of the averages, individual companies and groups show extremely diverse patterns. The following com- ments illustrate this pOint. AIRLINE COMPANIES were my favorite group for 1950. They have advan- ed sharply but they continue my favorite group for 19S1. They should be bought on all price dips. These issues have the possibility of ShOW.'ng the sharpest 19S1 earnings increase of any group. The graph patterns J indicate higher levels over the longer term (i.e. American Airlines Qr5, Eastern Airlines 30-34). The CHEMICAL STOCKS are not only approaching upside objectives but . also appear to have potential distribution patterns. This strong growth group will temporarily be hard hit by E.P.T. Allied Chemical (60 3/4), American Cyanamid (79 3/4), and duPont (8S) are now selling at about 12-14 times their 19S1 estimated earnings on the rates of the present tax law. These tax rates may be increased further. While these issues could move moderately higher, the snaIl percentage upside appreciation does not warrant further holding. DEPARTMENT STORE ISSUES are just starting to break out of their long term accumulation areas and indicate hiher levels. They should be bought on price declines. Allied Stores (474)' Associated Dry Goods (22), Lerner (24 3/4), National (21), May Department (60) are on my recommended list. ENDICOTT JOHNSON, selling at 31, with a 1946 high of Sl 1/8 and a 1947 low of 27C, is reasonably priced. Book value is around 64 a share and the stock has a good E.P.T. base. Appeare to be building up a st'.'ong potential base pattern. Could receive substantial government orders. FANSTEEL METALLURGICAL (18 1/4) listed on the New York Curb, has an extremely strong technical pattern. One of the few companies that may show higher 1951 earnings after taxes. Buy on all minor declines. There is support at the 17-16 level. GENERAL ELECTRIC (S2 1/2), appears to be overpriced in comparison with WESTINGHOUSE ELECTRIC (36 1/4). On the basis of present tax law, Westinghouse's estimated earnings after taxes for 1951 should be quite close to General ElectriC, although the stocks ae selling 16 pOints apart. Possible calling of Westinghoue convertible bonrs has been holding back the stock. Although 19S1 earnings of both companies may be below 19S0, Westinghouse appears more attractive than General Electric. PAPER STOCKS appear to be fully valued at present levels. They have shown excellent appreciation but have, in most cases, reached their upside objectives. Would sell such issues as Crown Zellerbach (SO 7/8) . and International Paper (54 3/4) The earnings of the PETROLEUM COMPANIES will not be greatly effect-' ex by increased taxes because of depletion allowances. Estimates are that .19S1 earnings may be slightly above 19S0. However, most of the stocks in the group have about reached their longer term technical objectives and appear fully priced. Possible exception is PLYMOUTH OIL (56 3/8). which has a very strong technical pattern. Stock should be bought during re- actions to around the 50 level. . UNITED MERCHANTS (16 S/8) has a strong technical pattern, a good tax base and an above average yield. Appears undervalued in relation to other textile issues. EDMUND W. TABELL January 19, 1951 WALSTON, HOFFMAN & GOODWING Closing Averages Dow Jones IndustrialS 246.76 Dow Jones Rails 83.81 ,,,,.,..fThis haY. m.morudum Is not lin in 10m. to or b. all conltrued 1 an 0' ft',. MClll'm., oHef or sol1c1tllltlon of mentioed h.,.; The offOfIe',. ttNonqburyMot.rti.1 11haII.nybuncurPltn.p..tFromby tim. U to ,a time Waldon Hoffman maat of ;otm.aflon & GoodIn may only. It I. ba,ed unon inl!)rmat'on b.II,v.d unabl. but not nlc.uarlly complete, Is not 'i!lliIrarrleld as accurt. or final, and Is not Intendld to forlclo,. Indopendent inqul,..,.

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Tabell’s Market Letter – January 26, 1951

Tabell’s Market Letter – January 26, 1951

Tabell's Market Letter - January 26, 1951
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. ,. , Walston.Hoffmon &Goodwin NEW YORK 5. N. Y 35 Wall Streot DIGBY 4-4141 PHILADELPHIA 2. PA '..20 Walnut Street PENNYPACKER 5,5977 TABELL'S MARKET LEnER LOS ANGELES 13. CALIF 550 South Spring Strsl't MADISON 9 3232 SAN FRANCISCO 4. CALIF 265 Montgomery Street SUnER 1-2700 The intermediate term indicator gave a sell signal at Tuesday's close of 245.30. The last buy Signal was at 234 in late December. The market declined on Thursday to reach a low of 240.11 on the industrials and 80.34 on the rails as compared with the recent highs of 249.07 and 84.84. This 'sharp decline brought about a temporarily oversold condition and the indus-' ' trials rallied back to 244.51 by Friday's close. The intermediate terrr. sell Signal suggests caution, particularly in issues that have had sharp price advances. Expect continued backing and 'filling in the 250-236 range for some further time. This action may bUild up a potential distributional area. Graphs of individual issues continue to show diverse patterns with some issues quite vulnerable in the event of a general market aecline while other issues are near good support levels. ALLIED STORES was originally recommended for purchase at 34. Friday's close was 47 3/8. While this stock still indicates higher levels, my tech- nical work leads me to believe that other issues in the retail group may show greater percentage appreciation from here on. Suggest taking profits on Allied Stores and purchasing Associated Dry Goods, 23 1/4, Lerner Stores, 26 5/8, or National Department Stores, 21 3/8. All three of these issues are on my recommended list. AMERICAN & FOREIGN POWER 2nd pfd. closed at 16 on Friday. The stock was originally recommended at 14. The recently proposed reorganization plan deals unfavorably with this issue so it is dropped from the recommended list. Suggest switching into the airline issues on our recommended list. AMERICAN NEWS appears to be behind the market. The stock reached a high of 60 in 1946. Friday's close was 35 1/2. The stock has held in the 36-29 range since mid-1947. 1950 dividends were 2.50 a share. Average earnings for the three best years of 1946-1949 were about 4.96 so it has a good E.P.T. base. 1950 earnings will most likely be slightly below the 3.51 of 1949 but with increasing travel by both the military and civilians during the next few years, the outlook anc. earnings for this company should, improve. Technicall, an upside breakout of the 36-29 trading range to 37 would indicate a sizeable advance. With the general market close to the highs, new buying Should be con- fined to issues that are still depressed but show possible Signs of a turn for the better. Such issues would not be too vulnerable in case of a general market decline. The motion picture group appears to fit into this category. Two low priced issues, Columbia Pictures (12 3/4) and Universal Pictures (10 3/8) have potentially attractive patterns. Tile lows of rece,t years have been 7 3/4 and 7 as against 1946 highs of 36 3/4 and 49 7/e. Both stocks are recommended as speculations. PACIFIC MILLS was originally recommended at 30. Friday's close was 46 1/2. While this stock may sell off somewhat in a market decline, its favorable long term pattern indicates that it should continue to be held and bought on declines to around 40. Suggest taking profits on Anderson Claton, recommended at 55 and selling at 67, and Cannon Mills, recommended ,at 8 and selling at 56 5/8, and switching into Pacific Mills at around 40. The stock is slightly lower quality than the other two issues but its very ,favorable E.P.T. base (average 1946-1948 earnings over 10) places it in a , very attractive position. REYNOLDS METALS was conSistently recommended in this letter at the equivalent of about 20 after taking the recent 10 stock dividend into con- , sideration. A high of about 41 has been reached on the new stock.Friday's 'close was 39 1/2. The stock has met some supply recently and, although it indicates higher levels over the longer term, suggest taking profits in hope of repurchasing at lower levels. WESTERN AUTO SUPPLY should be watched closely on all price declines. Friday's close was 45. The stock was originally recommended at 40. The stock has a good technical pattern and sold as high as 90 in 1946. Stock has a ' good tax base with average 1946-1949 earnings of over 7.00. Estimated earn ings for 1950 are 7.00. EDMUND W. TABELL January 26, 1951 WALSTON, HOFFMAN & GOODWIN ,', ,,-, ,;' ;

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