Tabell’s Market Letter – April 23, 1954

Walston &Co. MEtJBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Switzerland J OffiCES COAST TO COAST CONNECTEr. BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER April 23, 1954 Strength in the aircrafts and steels held the industrial average in a trading area around the year's top level despite irregularity in other sections of the list. At the week's high of 314.38, the average was just a shade below the previous week's high of 314.44. The low of the week was 309.05. The technical pattern does not appear at all vulnerable despite the sharp rise from the September low of 255. Of course, the market is always subject to the type of technical correction we have witnessed four or five times since the advance started. At the present moment, a decline would meet strong support in the 304-300 level. This type of correction can be ignored -by -the'-long -term -and-intermediate term-trader- I–do -not-expec t-a decline of inermediate term proportions until the industrial averages reach the 325-330 area. The steel stocks showed very impressive technical action during the past week. Until recently, this group has shown below average action. The great majority of the issues in the group reached their highs in 1951 and their lows in 1953 1951 High 1953 -Low- Friday's Close Allegheny Ludlum Armco Steel Bethlehem Steel Inland Steel Jones & Laughlin National Steel Republic Steel U. S. Steel Youngstown S & T 52 1/8 51 3/8 60 62 1/2 31 5/8 56 49 1/2 47 3/4 59 1/4 25 1/8 30 5/8 44 3/8 35 7/8 19 40 1/8 35 3/8 33 1/2 34 33 7/8 42 62 1/4 51 3/8 23 51 51 7/8 45 7/8 42 5/8 Low was reached in late 1951 As can be seen from above, the action of this group has been extremely 'irregular. Most all issues reached their highs-in-Fetiruary, 1951-when tlie Dow-Jones industrial average was at 264. The average is now close to 314 but only two issues, Bethlehem Steel and Republic Steel, are above their 1951 highs. Because of this hitherto unfavorable pattern, I have not recommended many steel issues over the past two years. I suggested Inland Steel in September as a quality issue in the group and have mentioned Allegheny Ludlum mainly because of its .long term future in titanium. However, the recent action of this group suggests that they be added to holdings. My suggestion would be the three largest companies, Bethlehem, Republic and U. S. Ste.el. Bethlehem Steel Republic Steel u. S. Steel , Price 1953 Earn. 1953 Div. 62 1/4 13.30 4.00 51 7/8 925 4.50 45 7/8 7.56 3.00 indicated rate. Yield 6.1 8.6 6.5 It will be noted that, based on 1953 earnings, the dividend payout was small on all three issues. Of course, earnings are expected to be somewhat lower in 1954. The only company to report so far has been Republic Steel – which showed -earningsof 1.79 -for the first' quarter of 1954 as compare-d with 2.24 for the same period of last year. This is a drop of 20. Even if this pattern continues for the balance of the year, present dividends would be covered at least twice by two of the above companies. U. S. Steel will announce first quarter earnings on Tuesday, April 27th, and Bethlehem Steel on Thursday, April 29th. From a technical point of view, all three issues have been showing increasing relative strength. Bethlehem Steel and Republic have already broken out of trading ranges and U. S. Steel is close to doing so. In all three oases, downside support is not too far away from present levels. All three issues appear to be attractive purchases for long term appreciation. EDMUND W. TABELL WALSTON & CO. ih,s memorandum IS n().\ \0 be COI\\!rl,Led a\ an offer or solici.tation of offers to u oormse 11mtn!asel'uhnats'eSbeenFropmretpiamreed10blomues IWloSalIlso tomno!o&iluCo01. omroannty\\1phaorntnoenr'he11eolIS mOlt h.svc dn .nter('s/ In some or dli 01 11',(, securities menltoned herein The ,Of g t gd Cufdte or f,ndl dnd IS no! Intended to lorect;)se Independent ,nqulfY bdsed upon ,nlorlT'dllo,, believed rehable but not necessaflly complete, IS not guaran ee as ac , I