Tabell’s Market Letter – May 14, 1954

'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