Viewing Month: May 1954

Tabell’s Market Letter – May 07, 1954

Tabell’s Market Letter – May 07, 1954

Tabell's Market Letter - May 07, 1954
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Walston &Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,Id) OfFICES COAST 10 COAi CONNECTFC. BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lETTER i May 7, 1954 1 Both averages reached new high territory during the week despite the fact that in each day from 16 to 40 individual issues also dipped into new low territory and advances and declines for the week were about even. There is nothing in the technical pattern to suggest a change in this selective action. A great many issues indicate higher levelS. Others appear high enough and in need of a consolidation. Still others show no indication of animmediatmove inei ther direction. There are very few. that appear-tobe vulnerable to more than the usual technical corrections. Two weeks ago I reviewed the technical pattern of the steel group and mentioned its improving action. I suggested, in addition to Inland Steel that had been advised for purchase in the 36-40 area last year, that three other steels be added to my recommended list. They were Bethlehem Steel (621/4); Republic Steel (51 7/8) and United States Steel (45 7/8). In the table below are soe earnings and financial comparisons on these four issues. In order to make them comparable, they are stated either in percentages or in the amount of book value, etc. available if 100 of each issue were purchased at approximate present levels of 65 for Bethlehem Steel, 55 for Inland Steel and 46 for U. S. Steel. The majority of calculations are based on the December 31, 1953 reports. PER 100 INVESTED Bethlehem Book Value Working Capital Five-Year Earnings Five-Year Dividends Five-Year Re-Investment 1953 Earnings — 19'53cDlv1dend – – , – — 151.90 64.37 83.71 28.49 I 5522 20.48 ) 6.l6—r New Plant & Equip.19461953 121.10 EARNINGS TREND Inland 92.13 35.66 57.26 33.86 23.40 12.47 '-0.30- 76.56 Republic U.S.Steel 140.11 165.76 59.48 78.84 28.89 66.96 35.06 31.89 43.78 35.07 – 16.74 16.36 7 )6' ,- . – 0.51 126.70 – 174.90 1st Quarter 1954 vs. 1st quarter, 1953 TECHNICAL INDICATION Upside Potential Possible Advance Downside Support Potential Decline 89 75-85 30 58-56 14 131 65-70 27 50-47 14 78 72-78 41 48-44 20 89 60-65 41 43-40 13 Inland Steel is the quality issue in the group. It has a record of earnings and dividends that is less cyclical than the average steel company. It should be held for yield and moderate appreciation over the longer term. Bethlehem Steel also has appeal. It would appear thatfue indicated dividend rate has been increased to 5 annually to yield 7.9. Republic Steel is perhaps the most volatile of the group, but it has a very interesting upside potential. Perhaps U. S. Steel has the most interesting 'technical pattern. The huge post-war expansion program noted above has been financed from- internally generated funds.- This has resulted in a decline in working capitl and has held down earnings because of special reserves. This should result eventually in increased earning power, however. Dividends have been conservative. Most of the issues in our recommended list have Shown good action. Yale & Towne has reached new high territory at 46 5/8 and has broken out of its long trading range. Babcock & Wilcox has reacted from the recent all-time high of 52 to the 48-47 area. I believe it is in a buying range. EDMUND 1tl. TABELL WALSTON & CO. Th.s mllV mernorclndum .s not to bc have In ''''eres' In some construed or III of .,H an one, o sohcllaloon of oers to the securities ml'r',oned herein The lbouryeqOorrgellrnaan,V'suerIc'ullItaretShoHbr e enFropmreptiamreeD final dnd IS 10bvlomuse aWs'll'Istomlla not ,ntended to U&t,Coof o,rfoa.nmyat,D,d)rntnoernIlkyeealIS loreclsc Independent Inquory bscd upon ,nforl1dt''ln believed reliable but not l1eceH,Hlly complete, IS nol qu,Hdn el! d as

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Tabell’s Market Letter – May 14, 1954

Tabell’s Market Letter – May 14, 1954

Tabell's Market Letter - May 14, 1954
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'Valston &Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AtW COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (S.,,,.,I,,d I OFFICES COAST 10 COAST CONNECTFj BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lETTER May 14, 1954 When a stock or a group of stocks is in a prolonged downtrend, it is difficult, and sometimes quite dangerous, to try to catch the bottom of the downswing. It is usually wiser to wait until there are definite signs of a reversal. The textile group is a case in point. The American Investors Ser- vice index of eleven textile stocks has dropped from a 1951 high of 45 to a 1953 low of 22 and currently is at 24. There are, from a technical viewpoint no definite indications that the downtrend has been reversed, However, tech- nical action has improved considerably during the past week and the group should be watched closely. Sales and earnings are continuing to show unfa- vorable comparisons with those of the first six months of 1953,but there is a good prospect for improvement in the later part of 1954. – The- tl'iT'ee 'stocks -listedbelow-areamong-the betfer–graaet-extHe -. issues. At recent lows; they appear to have quite adequately discounted the current unfavorable picture in the cyclical textile industry. Moderate amounts of these issues might be added to portfolios during periods of mar- ket irregularity, but I would avoid the more speculative members of the textile group Amer. Viscose Industrial Rayon Lowenstein & Sons Current Market . Current Dividend 36 2.00 43 3.00-A 33 2.20 Current Yield 5.5 7.0 6.6 Long Term Debt Preferred Stock Common Stock (shs.) None 20,645,000 4,095,918 None None 1,845,860 None 6,194,800 1,302,689 Net Per Share,1953 Net Per Share,1952 Sales, 1953 Sales, 1952 2.74 4.88 228,200,000 235,200,000 4.68 4.83 70,300,000 67,930,000 5.30 5.16 180,450,000 173,050,000 Market Range 1951-54 78 – 30 5/8 68 1/2 – 38 3/8 39 – 24 1/2 Per 100 Invested Five -year -Earnings ()8–80 Five-year Dividends 31.05 Five-year Re-investment 37.75 Book Value 141.39 Working Capital 44.01 Plant Expansion 1946-54 114.80 '60715–'—7–4' – .– 32.13 28.02 29.40 44.01 87.06 145.98 44.39 88.35 38.64 58.59 A – Also 5 stock. AMERICAN VISCOSE is the largest rayon producer and the second largest producer of cellophane. Chemstrand Corp.,jointly owned with Monsanto Chemical, has a nylon plant at Pensacola which started production in 1953. Another plant in Decatur, Alabama, has started production of Acrilan, an acrylic fiber. The Ketchikan Pulp Co.,jointly owned with Puget Sound Pulp & Timber Co., completed a plant in Alaska just this month. New Plant and equipment since 1946 are equal to more per share than the present selling price of the stock. The long term growth possibilities are excellent. Earnings for the first three months of 1954 were only 341 per share, but strong cash position indicates a maintenance of the 2 dividend. From a technical viewpoint,the pattern is not complete and considerable work is needed in the 40-30 range. Buy during periods of market irregularity. INDUSTRIAL RAYON is the third largest producer of viscose rayon filament yarns .-Two-thirds of its capacity isin-tire-yarns,demand for whichhas held up very well and accounts for its above average earnings performance. The stock has held in the 39-45 area for over a year and may be building a base. From a technical viewpoint, an upside penetration of this area would indi- cate 55-60. LOWENSTEIN (M) & SONS,INC. manufacture and merchandise low-priced and massproduced cotton and synthetic fabrics. Sales have increased each year for the last ten years. Dividend payouts have been conservative and working capital has increased materially. Technical action has been good. The stock has held in the 25-35 area for over three years. Ability to reach 36 would indicate an intermediate term 50-60 followed by eventually higher levels. EDMUND W. TABELL WALSTON & CO. fTh,s memorandum is not to be corulrued as n oHer or SOllCllatlon of oHen to buy or sell any 5ecurlh5 From time to lIme Walstorl & Co f or, any Cldner , thertol may have dn ,nle,es' ,n some or III of based upon ,nlOMallon belIeved rehable the but sneoclurniteIceesno'l!'l1rtelny'locnOe'dTlphleelree,inI The not. gfUodrreagnO'eIen,gt,m,..lHl,e'claculrahloen been prepdred or fmal, and bv not IH Int ,n end a ed mtoolthfo.rrecl0;'1,nl erma Ion on Independ …nl y ,s InquIry

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Tabell’s Market Letter – May 21, 1954

Tabell’s Market Letter – May 21, 1954

Tabell's Market Letter - May 21, 1954
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Walston &- Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Swiherland! OFFICES COAS) TO COAST CONNECHJ BY DIRECT PRlVATE WIRE SYSTEM TAB ELL'S MARKET LETTER May 21, 1954 I wrote an article for the January 7th issue of The Commercial and Financial Chronicle entitled 1954-The Beginning of a New Bull Market. At that time, the Dow-Jones Industrial Average was around 280 and I offered the opinion that the Average would reach a minimum of 325 by the end of 1954. It appears that my timing was a bit conservative. It is now only the middle of May and the Industrial Average has already reached a high of 327.43. The index has advanced 72 pOints from the September low of 255. This amounts to a rise of over 25 in eight months. Has the risebeen too rapid and is the market vulnerable I do not believe so. Of course, the market is not going to continue to advance without interruption. At some stage, we will witness a reaction of more than minor importance. However, at the moment, the market appears to be subject to no more than the normal technical correction similiar totht lict has occured several times since the advance started in September. There are now support levels at 315-310 in the industrials and 105-104 in the rails. It is possible that both averages will advance somewhat further before such a technical correction occurs. Of course, a discussion of the averages is more or less of only academic interest. This has been true since 1951. One could have fore- casted the moves of the averages with 100 accuracy and still have fared very badly if the wrong stocks were selected. I have just made a rapid survey of more than a hundred representative listed issues — all starting with A. Over half of them are below their 1946 highs despite the fct the Industrial Average is now selling over 100 points above the 1946 high of 213. ThiS, so far, has been a much more selective and intelligent stock market than any we have ever witnessed. It has been dominated mainly by the professional buying and selling of institutional accounts. In addition, the short-term trader of the '20s and '30s is gradually being replaced by a younger generation of investors who buy their stocks outright and are more interested in income and growth than in short-termurn9ver. As a resun; the -market has not be-en- subjectto'i;he Wild, -'speculative excesses of the past. This does not imply that speculation and risk taking are dead. There is a definite need in our economic pattern for the risk taker rather than the gambler. There is plenty of speculation in present markets but it is being conducted, in the main, on a much more intelligent basis by those who make studied appraisals of the gain potentials as compared with the risks involved. To return to the technical market pattern, while many issues have reached their upside objectives, there are others that still indicate higher levels. ThUS, it appears that the market will continue not to move as a unit. Many of the blue chip growth issues appear to be at or near objectives. The action of National Lead over the past five years may be used as an example. This excellent growth issue advanced from a low of 9 (after adjusting for stock splits) in 1949 to a high cf 33 in late 1951. This was approximately its upside objective. It had amply discounted its increased earnings and diVidends and was in need of rest and consolidation. It held in a trading area between 26 and 33 until '1953 when it again resumed its advance. Its upside objective is now approximately 52. The recent high was 48. After seme possihle furthRr rise, the stock may Le in need of a consolidating perlcd in some yet undetermined price range for some undetermined time period before the advance is again resumed. While this is going on, other 'issues of good but somewhat lower quality may con- tinue to advance in order to narrow the Wide price discrepancy between the blue chips and the light blue chips. During this period, I still see no indication of an important move in the majority of lower priced speculative issues. There will be exceptions, of course. In terms of the averages, I envisage a consolidation period in a range of roughly 335 high and 300 low for the balance of 1954 followed by higher prices in 1955. However, there will be many issues that will show above average action during this resting period. I hope, in my technical interpretations over the coming weekS, to draw them to your attention. EDMUND W. TABELL l-IALSTON & CO. ThIS rnemorilrldum .s no! la be (on'rlJed as an offer or sot,cllatlon 01 offers fo buy or sell any sccu.ill()S Flom time tOb tIme Wahlon Co i 0', any i'Hlne, lhefloS ma have an mlcres' In some or … 11 of bsed IIpon 1'110rmolhon b()lleved relIable the bul S!leocturnitcIeteslSmaerlnivtlonocmdplehlce,em's The not foregOIng guaranteed molSateariaulrahtaes been prepared or IlnCil, and IS If not us as /I mdo In'-ended to H 0 In foredole o.rnmdeapcIonneon 1'1 r I qUI l'

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Tabell’s Market Letter – May 28, 1954

Tabell’s Market Letter – May 28, 1954

Tabell's Market Letter - May 28, 1954
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Walston &Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY eXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO lUGANO (Swih,dd) OffiCES COASl TO COAST CONNECTEC. BY DIRECT PRIVATE WIRE SYSTEM TAELL'S MARKET LETTER May 28, 1954 It has become increasingly evident over the past week that the character of the market is slowly changing. The advance has broadened out and the blue chip investment issues are being replaced as market leaders, by issues of good but slightly lower investment quality. This, of course, was to be expected. The higher-grade investment issues have been in the foreground of the eight-month rise from the September lows. They have ad- vanced, in some cases, as much as 50 to 75 as witness General Electric from 69 to 124, Minneapolis Honeywell from 56 to 92, and Westinghouse from 40 to 73. These advances compare with a 28.rise in the Dow-Jones Industrial Average. Many of the higher-grade' issues-have reacned their immediate upside objectives and, from a technical point of view, are in need of a period of rest or consolidation. While this is taking place, the leadership of the market may be taken over by some of the light blue chip issues that still offer good value and relatively high yields. J'. few of these issues have already scored good advances since the first of the year but issues lik Bullard, that rallied from 26 to 49, Cornell Dubilier from 22 to 32, Cutler Hammer from 39 to 58, Illinois Central from 66 to 98, National Gypsum from 21 to 30, North American AViation from 20 to 34 and Sperry Corp. from 44 to 63 have been in the minority. Most of the secondary issues have not kept pace with the high-grade investment favorites of the institutional investor. However, there are still a large number of secondary issues that still indicate the possibility of higher levels over the intermediate term. Some of these issues have already had a fair advance but still indicate, from a technical viewpoint, a further. rise. Others are still holding in, or have just emerged from long trading areas, and have less downside risk in the event of a normal technical correction. I am listing a few issues below together with their intermediate term upside objectives and near-term downside support levels. They are of varying investment quality but all q,PRar tQ. b .inafE-vorablefundamentaLposition. , .- -. STOCK Allegheny Ludlum …………. . Allied Stores ………. American Potash B.. '.' …….. . Babcock & Wilcox …………. . Blaw-Knox …….. Celotex ………………. Flintkote ………………. Fruehauf Trailer …………. . Gulf Mobile & Ohio ……….. Hewitt Robins …………… Industrial Rayon ………. Lehman Corp ………' ……. Lowenstein M.) ………… Missouri Kansas & Texas Pfd .. Pennsylvania Salt ………… Pullman ……….. Robertshaw-Fulton ……….. Sto Joseph Lead ………….. . Simmons Company ………….. . Union Bag & Paper ……….. Union Oil ……………. United Fruit …………….. . U.S. Steel ………………. . Victor Chemical ………….. PRICE 33 44 44 52 20 20 31 25 30 30 45 39 35 65 47 51 21 39 35 53 49 46 49 33 UPSIDE POTENTIAL 40-44 55-60 55-60 60-65 26-28 30-32 40-45 34-36 40-45 37-38 58-61 46-48 45-50 85-90 57-64 65-70 28-35 48-50 47-52 65-70 60-65 57 -60 60-65 – 39-43 DOVINSIDE SUPPORT .. 30 40-39 40-39 48-47 19-18 18 29-28 24 28-27 28 42-41 36 32 62-60 45 48 20-19 37-36 34-33 50-48 46-45 44-43 44 30 Very few of these stocks are in the Averages so it would be possible for issues of this type to score worthwhile advances without having much effect on the Averages. That is why I have prOjected a trading range of only 335-300 in Dow-Jones Industrials for the balance of the year. EDMUND vi. TABELL WA.LSTON & CO. This may memorandum IS not 10 be hdve '111 onterest In some contrued or all of a 'HI offer or solkdailon of offers to buy or set! any 5eculle5 From I!mc 10 lime the H!(lir,toe5 mentioned herein The foreqoHlg mlerlal h.H been prepared bv us Wdlsion & Co. as a matter of oInr foarnmy atpiaorntnoenr lyther1et ofI, b,Hed upon ,nlorma!oon belleyed relllble but not necessarily complete, is not guaranteed .n accurate or 'lnal, lnd I not Intendd to 'orecloe Indepennl InqUlrv

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