Viewing Month: September 1954

Tabell’s Market Letter – September 03, 1954

Tabell’s Market Letter – September 03, 1954

Tabell's Market Letter - September 03, 1954
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Walston &Co. MEMBERS NEW YORI STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN fRANCISCO LUGANO ISw,'wld) OffiCES COAST TO COAST CONNECTEJ BY DIRECT PRIVATE WIRE SYSTEM TAB ELL'S MARKET LEnER September 3, 1954 Both averages broke belovi the early August lows and, for the first time since the intermediate term advance started in September, 1953, have established an intermediate downtrend. The Dow-Jones industrials reached a low of 333.21 as compared with an early August low of 338.70 and the rails reacted to 111.40 as compared with a previous low of 115.95. The lows were reached on 'Tuesday and since that time the market has recovered a good por- tion of the losses. At Thursday's high of 342.76, the industrials had re- gained just about half of 19.08 points decline from the August high of 352.27. A full two-thirds recovery'would bring the average back to 345.93. What is the significance of the past week's decline and what are the – chane'es that-the low -Sf the move 'has already been reached 'iit 333.21 The market has been in an intermediate term uptrend for almost a year without even a 5 correction. This was unusual. We have been in a ma- jor uptrend in the averages since 1949, during which period the industrial average advanced 120 from 160 to 352. Despite this major uptrend, the average had nine corrections of 5 or more from 1949 through 1953.The most severe was the Korean break in 1950 when the industrials declined 15. There were two declines of 9 and 8 in 1951 and t'hree in 1952. One of these was only 5 and was the mildest of the nine. The other two were 6 and 7. There were three in 1953 ranging from 7 to 10. The decline from the August high of 352.27 to the recent low was equal to 5.4. If the low was reached at that point, the present decline would rank with the mildest of the nine previous corrections. A 15 cor- rection would be equivalent to a decline to 300. An average of the nine previous declines is 8 which would bring the averages down to about 325. On my technical work, the first support point is 330 followed by a very strong support zone at 325-315. Regardless of whether the average has reached its low at 333 or whether it will work somewhat lower, the main thing that my technical work shows is that the present decline is merely an overdue correction of an eleven-fith aaVafi nf iilm6st 100 paints. This is not the start of a -major aec-line like 1946 'or 1937, but merely the-'tenth corr'ective- react- — .. ion in a major advance that started in 1949 and still has further to go. However, any discussion of the averages is purely academic. The action of individual issues is the important thing to watch. At the week's lOWS, many stocks appeared to be at or very closely approaching important support and buying areas. This is particularly true of the issues in my recommended list. Space does not allow me to reprint the issues in the list but they were all reviewed a month or so ago. They are 'again recommended for new purchase at or around the week's lows. In next week's \ letter, I will start an alphabetical review of the entire list. A few might be mentioned, however, as being particularly attractive at around the week's lows. They are American Potash B (55t), Blaw-Knox (22t), Cornell Dubilier (27), Idaho Power \51), Pan-American (13 l/e), Robertshaw Fulton (25 T/e), Union Oil(45), United Fruit (4Yale & Towne (44i), A number of other issues are showing excellent technical action and should be added to the recommended list during periods of weakness. Aluminium,Ltd. was formerly part of the recommended list, but profit-taking was suggested at around the high of 74 3/8. It reacted to 64t during the week knd was near the 62-60 area where repurchase is suggested. Arm Steel reacted from 51 7/8 to 46 1/8. Hould add to holdings in the 46-43 range. Cities Service has declined from 106 7/8 to 95 1/4. Purchase is suggested in the 95 90 area. DOW-Chemical at 39 1/4 Hi down from 44 1/4.- Hould add to the list at 38-37. Dresser Industries reached a low of 29 1/8, down from 32 5/8. The 30-28 area is a buying range. General Electric .,ould be in a buying range at 39-36 for long term growth. Hooker Electro-Chemical at 74 was near the 72-67 buying range. Kaise Aluminum should be bought if the 33 1/4 low is reached again. As a low-priced speculation, Ravtheon should be bought around the week's low of 12 5/8, down from a high of 15 1/4. Harren Petroleum reached 35 1/2, down from 40 3/8. It is in a buying range at 36-35. Visking Corp. reached a buying point at 62. Western Union has formed a very strong technical pattern. At the week's 10Vi of 50, down from 55 5/8, it was at the 50-48 buying range. EDMUND 1;). TABELL WALS'l'ON & CO.

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Tabell’s Market Letter – September 10, 1954

Tabell’s Market Letter – September 10, 1954

Tabell's Market Letter - September 10, 1954 page 1
Tabell's Market Letter - September 10, 1954 page 2
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I .. Walston &- Co. -' MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADelPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw ..d) OfFICES COAST TO COAST CONNECTE BY' DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lEnER September 10, 1954 Despite the low volume, the advance from the 333.21 low established in the latter part of August has been quite impressive. The Dow Industrial Average has regained more than the normal one-third to two-thirds retrace- ment of the previous decline. It would seem that the next correction should hold above the lows of late August. However, as reiterated so many times before, the action of individual issues will be quite diverse. I visualize a Wide trading area over the near future with selective strength in the secondary issues and in the more specu lative stocks, and a further resting period for most of the higher grade ,share — … –….o; ,- ,,……… …–.-. Periods of market weakness should be used to add to holdings in recommended issues. Recent action tends toward the conclusion that the 335-330 area will be a strong support zone. It might be appropriate at this stage of the market pattern to revie the technical background of a portion of the issues in my recommended list. The balance of the list will follow next week. ABBOTT LABORATORIES (46) Appears to be slowly forming base in broad 40-49 area. There is strong support at 40-39. Ability to reach 50 would indicate 59-63,but there is supply at 50-55 that might slow action. ALLEGHENY LUDLUM S'I'EEL (35) Stock appears to be building a strong potential base in 26-39 area. Present upside potential is 45-60. There is supply at 38-42 that may slow action. ALLIED STORES (47) The upside penetration of the long 36-41 base indicates 55-65. Recent high was 48. Buy on moderate declines. There is support at 45- ALLIS CHALMERS (63) The stock has been in a slow uptrend channel since 1949. Present outer limits are 56 and 69. Recent high was 67. Buy on minor price declines. The long term objective is 90. AMERICAN POTASH & CHEMICAL B (58) This issue has a very bullish long term potential. The first objective appears to be 75-90 followed by a possible loB-lIB. Recent high was 61. Buy on all minor price declines. AMERICAN RADIi,TOR (191 The upslde- p-enetration oTtlfeeightyear.c61dbase – at 12-17 indicates an intermediate term 27 followed by a long term 40. There is temporary supply at 20-22 that may slow any advance. There is support at 17-16. Recent high was 20. AMERICAN TELEPHONE & TELEGR'PH (172) The intermediate term indication is 171-179 followed by a long term 200. There is support at 170-165. Recent high was 175. AMERICAN VISCOSE (36) Appears to be forming a base in the broad 31-39 ngel' More time and patience may be required. Present upside potential is 52-57, but pattern may broaden. BABCCCK & vnLCOX (59) The long term upside objective is 75-Bo. Nearer term objective was 61-65. Recent high was 65. Stock held in 65-59 range. Down- side penetration indicates 53-50 where stock should be bought. BLACK & DECKER (47) The upside penetration of the long 40-32 range indicates 45-51, followed by a long term 70-Bo. Recent high was 50. There is support at 45-43 where stock should be bought. BLAH-KNOX (23) Stock has formed a very strong base with an upside potential of an initial 30-35 followed by a long term 45-50. fiction so far has been slow but, from a technical viewpoint, this issue appears to be outstandinglY attractive. Recent high was 25. There is downside support at 21-20. BUCYRUS ERIE (30) Pattern is irregular but the long termindication is -33- 38 followe'd-by possible 42-44. There i-s -downside support at- 2B-27 . BURROUGHS (21) The-upside penetration of the long 13-lB range indicates 34-37 for longer term. Buy on moderate declines. Recent high was 22. There is support at 20-18. CELOTEX CORP. (22) Stock formed a strong base pattern in 14-21 range. The upside penetration indicates 29-31 followed by 3B. Recent high was 24. Buy on dips. There is support at 21-19. CERTAIN-TEED (19) Stock has built a strong base in broad 12-lB area. Upside penetration indicates 2B followed by a long term 38-41. Buy on price dips. There is support at 18. CHAIN BELT (41) Long term indication is 65-Bo. Near term indication is 41. Recent high was 42. Buy on moderate declines. There is support at 36-34. Tho, m4Y memor4ndum '5 l'Iot 10 be hot, an .nterest ,n some conlirUld or all of ,III an off.r or 01,(11,,1;01'1 of off,n to buy or 5.11 any 5e(;urot,el from time to ',me the l,cufll.u mentioned her'!n The fOfeQOlng mal,rial hal been prepared b, UI Wailion & Co; 0111 a matter 0 o.nrfoarnmya fartn., Ion on ,Ih.r,o!. y IS bled upon ,nrormahon belieed tell1ble blolt not necflarl1y complete, II not gU1fanteed U .(CloIr.t, or final, and II not intended to toredole ,ndependent InquirY .. ; , I , .( ..- ' -2- COMBUSTION ENGINEERING (52) Long term upside objective is 65-80. Near term objective is 52-60. Recent high was 58. Buy on dips. There is downside support at 50-47. CORNELL DUBILIER (27) Stock reached its first upside objective at early 1954 high of 32. Long term objective is 41. Has held in 27-31 area. An up- side penetration would indicate 35. There is downside support at 27-25. CRANE & CO (36) Stock has held in broad 2242 area for eight years with most of the time spent in 29-40 range. The minimum upside potential is – 5'761 with a-possIbl'e 'Il1aximumf-an-advanc;e-to-75-95-are-a7More-timeffiay -., be spent in this broad accumulation area but stock appears to be an out- standing vehicle for long term holding. The nearer term objective appears to be a possible 41-45. There is support at 31-28. DRESSER INDUST .. (31) Stock has penetrated the heavy overhead supply at 24-26 to reach a high of 32. The upside objective appears to be 44 followed by a possible 60-70. Buy on all dips. There is support at 27. EAGLE PICHER (24) Stock has held in 18-23 range for over two years. Upside potential is 25-29. Recent high was 26. The upside implications of the broad 15-27 area in which the stock has held since 1946 would be 40-45. ELLIOTT CO. (27) The long term indication is 50-60 but recent action has been poor. May be forming an intermediate term base in the 22-27 area. The upside penetration indicates 35-38 but action may be slow. There is support at 24. EL PASO NATURAL GAS (40) The upside penetration of the long 30-38 range indicates an advance to 49-51. Recent high was 43. There is support at 37-35. FLINTKOTE (32) Stock held in 22-33 area for five years. The upside pene- tration indicates 41-45 followed by 54-58. There is downside support at 30. FRUEHAUF TRAILER (27) Stock has held in 22-27 area since 1952. Upside pene- tration indicates 36-42. Recent high was 30. There is downside support at 27–25. ,-. – – – -.- , – — -; —,— ….— GENERAL RAILWAY SIGNAL (31) Stock held in 25-31 area. The upside- penetration would indicate 37-40 followed by a later 45, but there is heavy sup- ply at 32-36 that will slow action. Recent high was 34. GLIDDEN COMPANY (38) Stock reached both its downside objective and a strong support level at the 1953 low of 28. A base was formed in the broad 28-38 range. Upside penetration indicates 47-50. There is support at 38-35. !. GULF, MOBILE & OHIO (33) The upside penetration of the 27-31 range indi- cates 40-45. There is supply at 33-37 that may slow action. There is sup- port at 31-29. Recent high was 35. HEWITT-ROBINS (31) The upside penetration of the long 14-29 range indi- cates 53-58. Buy on all minor dips. There is support at 30-27. IDAHO POVIER (50) Stock has a very strong base pattern with an ultimate objective of 68. 1954 high was 57. Buy on minor declines. There is sup- port at 52-49. INDUSTRIAL RAYON (46) The upside penetration of the 39-45 base indicates an advance to 58–63. There is support at 45-43. JOY MANUFACTURING (33) The eventual outlook is for higher price levelS, but there is no indication of any immediate move. Can be held for income. An upside breakout of the 30-40 range would indicate 55 followed by 75100, but 'thIs move app-e-ars far-off. A15llityto reach 37 would' oe a very constructive signal. KENNECOTT COPPER (83) The upside indication was 80-84. The recent high was 87. Time will be needed to form a new pattern. No immediate indication. A base may build up in the 75-80 area. Buy on weakness. LEHMAN CORP. (39) The upside penetration of the 32-36 range indicates 46-48, but there is supply at 39-40 that may slow down advance. There is support at 36. LOWENSTEIN (38) The upside penetration of the 31-35 range indicates an initial 45 followed by 53-61. There is support at 35-33. EDMUND W. TABELL WALSTON & CO.

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Tabell’s Market Letter – September 17, 1954

Tabell’s Market Letter – September 17, 1954

Tabell's Market Letter - September 17, 1954 page 1
Tabell's Market Letter - September 17, 1954 page 2
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r' c't'' – —, – – – – – – ——- – . -/' — . . —..- Walston &Co. MEMBERS NEW YORl( STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO ISw,t,.,Id J OFFICES COAST TO COAST CONNECTfG BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET LEnER September 17,1954 The industrial average has moved into new high territory and the in- termediate term correction of the long term advance proved to be one of the mildest of the ten recorded since June 1949 and was completed in a very short time period with very little effect on individual securities. What the averages do from this point on is not particularly 'important. The entire advance that started in 1949 has been characterized by extreme . sele tizi ty. ,-;r.D.as–\,-ee,n.parJ.icularliYtrue,inthepas.t-4wo'.years '. -Thiis selectivity will, in my opinion, continue into the foreseeable future. A few issues have had excessive price advances and are in need of rest and consolidation. A few other issues are faced with a declining earnings trend and may do nothing marketwise or work lower. Outside of these two categories, there are plenty of issues that will show improved earnings, high dividend yields and appear to have a favorable business outlook. Issues of this type should move higher. Below is the continuation of the technical appraisal of the issues in my recommended list MINNESOTA POWER & LIGHT (24) The stock appears to be in a slow uptrend channel. The outer limits are now 27 and 21. MISSOURI-KANSAS-TEXAS,PFD. (760 The stock has held in the 58-70 range since mid-1952. The upside penetration indicates 88 followed by 104. There is support at 7067. MONTANA POWER CO. (36) The upside objective is 38-40. The recent high was 38. Time may be needed to form a new pattern. NATIONAL GYPSUM (34) The initial objective was 32-35, but the broad 15-23 base has an ultimate objective of 42-44 followed by a possible 50-54. Reached a recent high of 37. Has held in 37-33 area. An upside Pnetra- – tion would indicate 41-,42., —. NEW-YORK AIR BRAKE (,20)1he stock appears to be ,,, C-'. forming a potential base at 17-13-18 with a top at 23. An upside penetration would indicate 29 followed by a later 40-1,2. A dip below 17 would indicate 12. Action may be slow. PAN-AMERICAN WORLD AIRWAYS (14) Probably has the best term pattern of the airline group. Ability to penetrate 12 1/2 indicates, 17-19 followed by a long term 27-35. Recent high was 15. There is strong support at 13-12. PARKE DAVIS (33) The stock reached its downside obj ectiVea't the 1953 low of 31. Has held in the 31-37 range. An upside penetration would in- dicate 44-51. There is supply at 42-46 that will slow advance. There is support at 31-25. PENN-DIXIE CEMENT (51) The recent high was 56. The long term objective is 73-80. There is downside support at 50-47 where stock should be bought. PENNSYLVANIA SALT (46) The upside breakout of the long 41-46 range in- dicates an eventual 57-65. Recent high was 50. Buy on minor price dips. There is support at 44. PFIZER (CHAS.) (36) May be forming a head and shoulders base at 31-6-31 with a top at 38. An upside penetration would indicate 55-60. PITTSBURGH COKE & CHEMICAL (19) The top formed in 1951 indicated a dec line to tl!.20-16a.r.,a. 195! .low- was 18There isus-t,-ong support at . — -17-i6. May be forming a potential base in the 18-22 range. An upside penetration would indicate 25-30 where there is heavy overhead resist- ance. An interesting speculation. PUBLIC SERVICE OF COLORADO (41) The upside objective is an eventual 46. The recent high \/as 43. Time may be needed to form a new pattern. II n ,curili.. From time to lime Wo!Ililon & Co. or any partner thereof, 'IiTh may memoroltndum 1'1 not 10 be h…. an 'nterut ,n some construed or al\ of .1 on off.r or the securities sol,c,lat,on of o'f.,. to mentioned her.1ft The fbourye9or'ns9.. iii ,!ri' h,n bn prepared ma cc rate or final and by not UI o!I matter of ,nformation 01'11.,. It , ,.. ded to loreclole independent ,nqulry b,ned upon inlormtltlon beli.yed reliable bitt not I'I.CtIar,ly compl.'e, IS not 9uara u . ' o ,,..,,,,,,,,,,,,u,,,,,,.;;',.,.,r.-.n.,–m'-.r,nar.,………….,……- – – – ' – – – – -.'…..-.;.;' .. ., ; i '. ' -2-' PULLMAN (56) The upside penetration of the 5648 area indicates 69-76, but there is heavy supply all the way up ,which will slow action. The near term indication is 60-64. Recent high was 57. There is support at 51-48. '. RADIO CORP.OF AMERICA (34) The stock formed a very strong base in the 21-29 range. The objective is 34-36 followed by a later 43. Reached a high of 35. Has held in the 35-32 area. An upside penetration would indicate 41. There is support at 30. ' , 'REPUBLIC' STEEL-' (63)- The'upside potential appearS''to-be-7278The re'-'' – cent high was 64. There is downside support at 56. ROBERTSHAW FULTON (28) The upside penetration of the 15-21 range indi- cates 29 followed by 39-40. There is support at 25-23. Recent high was 29. ST. JOSEPH LEAD (40) The upside penetration of the 31-38 base indi- cates an objective of 47-50. Recent high was 41. There is support at 35. SHAMROCK OIL & GAS (49) The intermediate term indication is 50-56. The recent high was 51. The long term indication is 65-75. Has held in the 45-51 range. An upside penetration would indicate 58-60. A downside pene- tration would indicate a return to the strong '43-42 support level. SH1MONS COMPANY (35) The upside penetration of the 28-35 area indicates 47-52. There is some supply at 37-40 that may slow action. Recent high was 37. The long term indication is 70-80. Has held in 38-34 area. Up- side penetration would indicate 40-42. Downside would indicate 32-30 where stock should be bought. ' SYLVANIA ELECTRIC (37) The stock held in the 30-36 range since early 1953. The upside penetration indicates 41. Reached a high of 40. The long term potential is 60-64 followed by a possible 77-81. There is down- side support at 35-32. UNION BAG & PAPER (62) The stock has an irregular pattern but the upside Rpee'nceenttrat'ihotgnhowafs t he 63 39-50 —Buy onra-nmgoedeirnaXdei cates decl i 62-66 follo nes 'Tliere w-ised ' by sup pao-,iJl;aateC575080. UNION CARBIDE (81) The entire picture is one of a slowly rising trend punctuated by small trading plateaus. The recent high was 89. There is downside support at 77-75. A new pattern must be formed for a new up- side objective. UNION OIL OF CALIFORNIA (48) The upside penetration of the 36-45 range indicates 60-62 followed by a possible 70-76. Recent high was 50. Buy on all minor price declines. There is strong support at 45-43. UNITED FRUIT (50) The stock appears to be in the process of forming a slow base. The advance may be slow as there is heavy upside resistance. The potential base formed indicates 56-59 followed by 66-71. There is support at 46-42. UNITED STATES STEEL (56) The upside potential appears to be 60-70. Re- cent high was 56. Buy on dips. '. VICTOR CHEMICAL (33) The stock has broken out on the upside of the long 24-32 range. The first objective is 42-44 followed by a possible 48-52. The recent high was 35. There is support at 30. VISKING CORP. (64) The stock formed a long term head and shoulders bottom at 31-25-28. The upside penetration indicates a long term 95. There is support at 62-60. WESTERN AUTO SUPPLY (1!9J Despj.te the recent.. we.akness, .the.,.stockis still in a slow uptrend .There is heevy overhead'-supply and action may be slow. Upside potential for near term is 55-57. YALE & TOVINE (47) The initial upside obj ective was 49-52. Recent high was 49. Intermediate term pattern indicates 66 followed by a long term 80-90. Add to holdings on minor price declines. There is support at 43-40. EDMUND W. TABELL WALSTON & CO.

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Tabell’s Market Letter – September 24, 1954

Tabell’s Market Letter – September 24, 1954

Tabell's Market Letter - September 24, 1954 page 1
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– -….——' – – – —;– Walston &- Co. – u MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO ISw,'ml ..d) OffiCES COAST TO COAST CQNNECTE BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lEnER September 24,1954 Since the first of th- -e year, I have issued special reports on ten stocks that I believed had both a strong technical pattern. and an interest- ing fundamental and statistical background. Another such issue is reviewed below. DRESSER INDUSTRIES Statistics . Dresser Industries is a growing Current Market Current Dividend Current Yield 33 2.00 6.0 company seY'ving the expanding oil and natural gas industries. In recent years, the management has wisely shifted the emphasis from Long Term Debt Preferred Stock Common (Shares) 12,500,000 4,773,000-A 1,300,000 capital goods — for which there ;s a cyclical 'demand — to expendablE goods for which there is a steady and more stable demand. Thus,it Net Per Share,1953 Net Per Share,1954 Sales, 1953 Sales, 1954- 3.80 5. 00-E 128,870,000 130, 000, OOO-E is estimated that such expendable items as drilling mUds, drilling bits and repair parts now account to close to 50 of sales and capital goods items such as drilling Market Range,1951-1954 33 5/8 to 17t A – 47,730 shares of 3.75 Cumulative Convertible Preferred (100 par) convertible into 2t common through Sept. 15th, 1955. rigs, pumps, engines, blowers and compressors account for the balance. Until recently, the latter items were by far the larger part of sales. This shift to eX,'endab Ie items should result in more mode- – Fiscal year ends October, 31st rate fluctuations in earnings and a higher evaluation of such futurE E – Estimated. earnings. The original Dresser Company date back to 1880.The present Dressern- dustries was formed in 1944 as a consolidation of S. R. Dresser and Clark Brothers, a wholly owned subsidiary. The company has grown, in part, throug the acquisition of a number of companies, both prior to the consolidation a d also after. All of these acquisitions were made on an exchange-of-stock bas s. However, earnings remained low and the management, in order to obtain a hig – er profit margin and a higher return on invested capital, decided in 1948 t divest itself of some of its former acquisition. Three of its gas applianc subsidiaries were sold to Affiliated Gas Equipment in 1948 and the retail oil field supply stores were sold in 1951 and the Kobe division was sold this year. The only acquisition since 1948, but a very important one, was the IVlagnet Cove Barium Corporation, which was acquired in 1951. Dresser Industries, through seven divisions and subsidiaries, manu- factures and sells a Wide range of equipment and supplies to mainly the oil gas and petro-chemical industries. The company's plants are decentralized and are spread from New York to California vlith the main facilities concen- trated in the oil-producing areas of Pennsylvania, Texas and California. -The Clark Brothers division is the largest of the Dresser units. It is the leading manufacturer of gas engine driven compressors. These compres ors are used in gas transmission systems for the movement of natural gas from the producing fields to the ultimate consumer and also in certain re- finery operations. Clark has also invaded the industrial field with motor- driven compressors for compressed-air systems and other important indus- trial applications. The -Dresser Manufacturing division is also an important contributor to profits. It manufactures couplings for gas distribution systems. Coup- lings are used in gas distribution systems of every city in the country. Dresser also produces its product for general industrial use such as elec- tric motor frames, dump car cylinders and rings for jet engines as well as housings for diesel-electric locomotive generators. Dresser has almost no competitors in the coupling field. Its principal competition stems from other methods of joining pipe. The Pacific Pump diviRion has an outstanding reputation as a manu- facturer of high-pressure, high-temperature centrifugal pumps for refinery mmOr.l'dum cOI'UI.Id .,,n.., mollY h!l. !In /I not to be ,nterut ./1 ,omft or all of s the oHer or ucut.ti.. IChcit.tion 0' HefJ '0 mentioned herein Th, buy or leI! '''''1 Jrcurltie, lor'Qoll19 mat.ri,,1 hu b., F,om pr. time p.red totlm'fl W,,)stOIl & Co. ' matt.r of or lilly plillrtnct thereof information 0111,. It II / ..,. boned upon ,nformallon behe..ed reliable but not neeeual., compl.te, u no' guaranteed .u accur.t. or final, and i, nCit Int,nded to f(Jl'eciole ,ndepand,nt ,nqulV -2- use. These pumps will be found in almost every refinery here and abroad. A line of pumps for steam generation in electric utilities and a steam turbine for maritime use have also been developed. The rdeco division manufactures oil and gas well drilling and production equipment. It also produces radio, radar, TV and microwave towers. Sales of this division are large, but competition from National Supply, U.S. Steel and Bethlehem Steel and indeoendent producers is keen. The Roots Connersville Blower division recently celebrated its 100thyear anniversary.This division manufactures blowers and exhausters for moving air and gases at low pressures and high volumes. It enjoys an excellent reputation, but meets stiff competition from Allis Chalmers, DeLaval Steam Turbine and Westinghouse Electric. The two important contributors to the expendable goods side of the ledger are the Magnet Cove Barium Corporation division and the Security Engineering division. Magnet Cove Barium Corporation sales have quadrupled in recent years. Its sole product is drilling mud. This product is essential to the successful completion of a well, particularly as wells get deeper. It is used to alleviate the surrounding earth formation pressures which increase geometric- ally with depth. Wells are being drilled today at increasing depths. The average well may use 2,000 of these various mud additives, but in extreme cases mud costs per well may exceed 100,000. Drilling mud is an expendable item, used up in the drilling process, so its sales are much more stable than those of heavy equipment. Due to increasing drilling depths, it would appear that the use of mud will increase much more rapidly than drilling activity, and as a result Magnet Cove has excellent growth possibilities. The division's principal competitor is the Baroid division of National Lead Company. There are a number of other mud additive producers who have a limited line and who serve primarily restricted local areas. The Security Engineering division was acquired in 1945. It produces oil and gas well drilling bits and related drilling specialties. Its marketing area has been broadened from California to include the Rocky Mountain area and the Mid-Continent. Like drilling mud, drilling bits are expendable, and are worn out in drilling operations. Bit sales, like mud, are more stable than heavy equipment. Recent operations have been concentrated on the tricone drilling bit which was pioneered by the Hughes Tool Company. The Hughes bit has enjoyed patent protection since its conception, but the patent situation is no longer an obstacle and production in the Dallas plant of Security Engineering has increased. The present market for tri-cone bits is roughly 100 million a year and Security now has an opportunity to participate in this lucrative field. Another development that could eventually result in higher o.1'!'ing3 is the recent announcement that Atlas Corporation and the Argentine Government were reported to have agreed on a contract to develop the latter's oil resources. It was indicated that Dresser would be associated in the project. Earnings have been showing a rising trend. Earnings for the nine months ended July 31st were 4.28 as compared with 2.39 in the 1953 period. Part of 1954 earnings were non-recurring, but net for the fiscal year ending October 31st should be somewhere in the neighborhood of 5.O per share. In July, the dividend was increased from 40i quarterly to 50i, thus putting the stock on a 2.00 annual rate. Dividend payouts in the past have been modest and have averaged only about 35 of earnings. The company's financial position remains strong. Cash alone exceeds total current liabilities by a comfortable margin and total working capital continues to increase. With expendable items constituting an increasing portion of saJes,it is to be expected that earnings in the future might be evaluated at a higher rate than in the past. An earnings projection of 7.50 per share over the next several years does not appear to be out of line. At a price-to-earnings ratio of 8-to-l, an average price of 60 appears, indicated. This checks with the technical pattern. The upside potential appears to be an initial 44 followed by a long term 60-70. There should be downSide suoport at 28-27 in the event of a general market decline. EDMUND W. TABELL WALSTON & CO. AS OF TODAY, WALSTON & CO. IS MOVING TO NEW AND ENLARGED QUARTERS ON THE 20th FLOOR OF 120 BROADWAY. THE TELEPHONE NUMBER WILL REMAIN THE SAME.

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