Viewing Month: May 1955

Tabell’s Market Letter – May 06, 1955

Tabell’s Market Letter – May 06, 1955

Tabell's Market Letter - May 06, 1955
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Walston &- Co. MEMBERS NEW VORl( STOCK EXCHANGE AND OTHER LEAOING STOCI( AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO ISwit,lend I OFFICES COAST TO COAST CO'lNECHi BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET LETTER May 6, 1955 For the past three weeks,-both averages have remained in trading shelves with the industrials in a 432-420 range and the rails in a 162-157 area. Or- dinarily, a breakout of these areas would be of considerable technical signi ficance, but under present circumstances, I question its importanee. A down- side of the industrials would meet support first at 415-410 and again at 410-400 and lastly at 400385. These are all strong support areas as the average has held in the 420-385 range or higher for over five months. The rail pattern is somewhat different (and stronger). There is good support at 155-150 and very strong support at 150-140. On the upside of the recent trading -area there is, of no -has,there of a re-accumulation area formed to indicate much higher than 435-450 on the industrials and 168-172 on the rails. In other words, from a technical viewpoint it would appear that the probabilities over the next few months favor a relatively wide trading area with extreme selectivity rather than an important general move either up down. This technical pattern appears to about coincide with the fundamental market background. Based on present earnings and dividends, the market is, in most cases, adequately valued at the present l''''ice level. Any sharp price rise would result in temporary overvaluation and a vulnerable technical pattern. On the other hand, with the rising trend in earnings and the favorable longer term outlook, any sharp decline in prices would present a favorable buying opportunity. Extreme selectivity will continue as illustrated by the recent action of the aircraft manufacturing issues. This group had been one of the market leaders with a rise of over 200 in eighteen months. The group became over- bought in February-March and in the past two weeks has declined sharply with individual issues dropping 20 to 40. The inherent strength of the general market is illustrated by the fact that the industrial average declined less than 4 despite the sharp drop in the important aircraft group. Fortunately, there are no other groups at the moment, with the possible exception of some of the machine tool issues, that appear as as did .. will be intensified over the next few months with some groups advancing at the same time that others are dpclining. It appears to be a time to be neither aggressively bullish or aggressively bearish on the general market, but to be extremely selective on individual situations. I would be inclined to avoid issues that have advanced sharply and appear to be overexploited and concentrate on issues that still appear reasonably valued Three such issues are Allegheny Ludlum, Dresser Industries and Joy Manufacturing which are all on my recommended list ALLEGHENY LUDLUM STEEL is yielding slightly over 4 at the present 'itice of around 48 and the 2.00 annual dividend. It is possible that a small stock dividend might be paid later in the year. First quarter earnings of 1.37 were sharply above 195trresults of 58/. Continued demand for special- ty steels should help the immediate picture and the long term pattern is very promising for titanium /prospects. Technically, the stock indicates 57 for the-nearer term and 74 for the longer term. There is downside sup- port at 43-39. I DRESSER INDUSTRIES is another issue that appears to have a minimum of downside risk and a very constructive long term technical pattern. At present prices of 43, the stock offers a yield of almost 6 on the 2.50 dividend. Earnings for the January quarter were,a bit below last year's results, but themerger with Lane-Wells and the consequent diversification of sales should result in a higher level of earnings over the not too distant future. The technical pattern is impressive with a long term indication of 70-80. There is downside support at 41-39. JOY MANUFACTURING at 4'9 yields over 5 on the 2.50 regular rate. Earnings for the fiscal year ended August 1954 were sharply lower at 4.08, but are slowly improving. Earnings for the March 31st quarter totalled 1.36 as compared with 1.04 the year before. Longer term prospects are favorable, both from a fundamental and technical Viewpoint. There is downside support at 45-42 and the upside indication is a nearer term 55 followed by 72 and much higher levels over the longer term. EDMUND W. TABELL '11 ArSTON & CO

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Tabell’s Market Letter – May 13, 1955

Tabell’s Market Letter – May 13, 1955

Tabell's Market Letter - May 13, 1955 page 1
Tabell's Market Letter - May 13, 1955 page 2
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Walston &- Co. t.IEMBERS NEW YORK STOCI( eXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADelPHIA LOS ANGELES SAN FRANCISCO LUGANO Sw,h.d.,d I OFFICES COAST TO COAST BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER May 13, 1955 HE\JITT-ROBINS, INC. Statistics The usual characteristic of – any growth stock is that the pricer Current Market 34 earnings ratio is high and the Dividend 2.00 yield is low. The common stock of Cu–r- rent Yield 6.0 C', – Hewitt-Robins, Inc., however,which – ..- Funded 2.62t Debt. Cum.Pfd. 5,148,000 25,000 shs. of dynamic growth, is now sellingten times the average annual earn- Common 287,051 shs. ings for the past ten years and is yielding better than 6. It Sales, 1954 Sales, 1953 35,590,000 38,490,000 to represent intrinsically sound value in these &ays of shrunken yields anfr high-priced earnings. Earned Per Share,1954 2.82 Hewitt-Robins grew out of two Earned Per Share,1953 4.29 companies. The first of these was Robins Conveyor Belt of assaic, – Mkt.Range,1955-1953 35 5/8 – 23 5/8 New Jersey, a manufacturer of con- veyor equipment serving the mining, sand and gravel, cement and steel industries. During the depression, Robins Conveyor Belt purchased a controlling interest in Hewitt-Rubber Com- pany, a tire manufacturer, and transformed it into a maker of quality indus- trial rubber goods. The two companies merged into Hewitt-Robins, Inc. in 1945. The reason for the stock market's lack of interest in Hewitt-Robins -leemso.ctolie .ito.is still dustrial machinery. This fails to take into a fact that a in–. large part of Hewitt-Robins' sales lies in the field of materials handling and foam rubber. Both these fields have excellent growth possibilities. – Materials handling, as it applies to Hewitt-Robins, means the transpor- tation of materials by a system of conveyorsand conveyor belts. The wide- spread growth of automation is necessitating ,the use of these in more and more factories. Hewitt-Robins is currently the only company in the world able to offer the factory owner a complete system including both machinery and belting. Other companies offer either one of these components, but only Hewitt-Robins is able to install a complete materials handling system with full maintenance responsibility for the entire operation. In this field, the company is also dOing extensive research on moving sidewalk, which may be commonplace in the airports, theater, and other public places of the future. Hewitt-Robins' foam rubber division also appears to have a good growth potential. The company made its entry into this line through supplying feam rubber seat cushions to automobile manufacturers. They are major suppliers to General Motors, Chrysler and Ford. The company's expansion has been the- most. dynamic field. Recent.ly they purchased assets,-,-of the Fre- mont Rubber Oompany and installed a spreader unit which produces foam rubber in belt form. At the time of its acquisition in 1954, Fremont was operating at a loss and did so through the larger part of last year, but it has now been put on a profitable basis and this year will make a substan- tial contribution to earnings. Up until this year, Hewitt-Robins' earnings while reasonably steady, have shown little or no growth. This is attributable to the fact that the management has devoted most of its energies to expansion rather than to oft.nl 'tmor.ndum is nol to b, corulrUld II ,,. off.r or i01itit.tiofl of to bioi, or lin ,n, 'Kutle' From time 10 'ime W.ldon , Co, or tny p.,'n., th.ftof m..y …… ,n '' 'rut ,n 10 or ,II of 'h, Hcyrlli flolled h.r.ln 'M ',ltl1'lai II.. b.,,, prep,r,d bitt 101 I' m.ftu of l.. only II !I.ned lipan info,m!lt,o b.hued Itbl. bllt not nec.IMrU, cOl'llpl.t., is not qUlrlnt.,d .1 ecc.'''' Ot' fin,l, nd II not ,nl,nded to for'clOIe ,ndep,nd,nt InqllV – r -2- cutting of costs and efficient development of sales of its existing products. The present year should be one of consolidation, during which time the management will be able to concentrate on cutting costs, increasing sales and reaping the benefit of the huge expansion program of the few years. Net sales. for example, have increased from less than million in 1949 to 35t million last year, and during the first quarter of this year the company operated at the rate oofperifaOtemaitl-lion apnually. expected .tMtit armual -level wiUiout further capital – cost. Last year's relatively poor earnings showing of 2.82 per share is attributable first to unusual competition in the industrial rubber field; second to the loss incurred in the Fremont operation and third, to a six-week strike at the Staten Island plant. This year first quarter earnings were increased to 881 vs. 721 last year. We would- estimate annual earnings of 3.50 to 3.75 for 1955 with further in- creases to come. It is not at-all hard to estimate an earnings level of 6 to 8 a share for Hewitt-Robins within the next several years. To realize these earnings, it would only be necessary to earn an amount on the present capital equal to-that which has been earned on much less capital in prior years. Hewitt-Robins' book value has shown an increase every year during the past ten years from 25.72 in 1945 to 41.40 at the end of 1954. Working capital has been increased from 4 million in 1945 to around 10 for the past three years and plant and properties from 3 million to over 7 million. The earnings potential inherent in this great increase in capital assets is just beginning to be realized. -1s The-tchnicar-panern on HewiURob-ins -very and implies only a minimum of downside risk as there is strong support in the 30-26 area. On the upside, the preliminary objective appeersto be 40-43 with a long term projection of 85. It would seem that a deter- mined effort to consolidate and increase earning power on the part of an aggressive management can make this projection a reality over a period of time. ANTHONY W. TABELL IALSTON & CO.

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Tabell’s Market Letter – May 20, 1955

Tabell’s Market Letter – May 20, 1955

Tabell's Market Letter - May 20, 1955
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II Walston e-co. t.!EMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCI( AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,e,ld I OFFICES COAST TO COAST CONNECTEC BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER May 2-0, 1955 Both averages have broken out on the downside of month-old trading ranges b the decline has halted at initial areas. The- DowJones industrials d Dped out of the 432-420 trading shelf but met supoort in the 415-410 area reach 412.69.- By the week end, the industr-ials c had crallied back t 423.84. The rails have followed a similiar oattern. The downside breakout o the 162-157 trading shelf was halted in the uODer part of the 155-150 initiru s port area at 153.73, and the average has rallied back to 157.91. Whether tre d line reached its ultimate lows is still problematical. My technical indicat br 'w ch signalled sell in late Aoril has not yet reversed the sell Signal, but is i a oosition to do so shortly. In any event, there are successive support arss i both averages not too far below the lows and I would expect any declin a this stage of the market pattern to be extremely selective. From a technical viewpoint, it is difficult at this time to envision a Wide m e in the general market in either direction. Technically the prese m ket has a somewhat similiar pattern to that of the 1951-1953 market. During t t period, the industrial average held in a range between roughly 240 low and high, a range of a little over 20 from low to high. During this period, t e chip growth issues consolidated and held in narrow trading areas. Du Pont f example, held in the 80-100 area for twenty eight months and most other gro t e ities underwent similiar reaccumulation patterns. On the other hand B g ups had wide price fluctuations both upside and down.- So far this year the industrials have held in the 432-385 area, a range bf , r ghly only 12. I would expect this trading area to broaden somewhat, but whe I i will broaden on the upside or the downside is still problematical. On the b fsis 1-0 pr-esent earnings-alld d-ividBnds the-market wDuld seem- overvalued at about- 450 a undervalued at around 350. From a timing viewpoint, it is probable that afiEir' s e further irregularity, the market will have its traditional Memorial Day to L or Day advance. After that, it would be normal to expect a return to the p t of the 11ide tradir.g area later in the year. r This contemplated pattern suggesto a ht issues if capital appreciation is market that necessitate owning the the prime motivation. It also suggests la m ket where over-exploited issues should be avoided. In the 1951-1953 market, C anese dropped from 58 to 20 at the same time that Seaboard Air Line was a ancing from 18 to 48. Similiar divergience will undoubtedly occur in the c( templated trading shelf in which the market may hold for a considerable perid o time. the long term investor, the contemplated pattern suggests no radical chan e ir I would maintain a fully invested position in good sound growth estment My belief is that the Dow-Jones industrials will reach 6c in 1958-60. For new purchases, would stress defensive qualities rather tha aI reciation prospects. For those interested in longer term capital-gains, would be a bit on the c tious side and would lighten committments on strength into the 435-450 area o on strength in industrial issues. It is possible that this area will not be r cheq and it may be necessary to advise lightening committments at a lower le e He ever, from present technical indicationsIcontinue to expect a somewhat stronler rna during the summer months. This should allow building up partial liquidiy ir prder to be in a position to re-enter the market at the lower part of the ce trading area. I would limit new committments to issues in groups wreir'e relative strength action has been above average in recent weeks. I pc like selected rails, chemicals, natural gas, department stores, eJ tronics, airlines, utilities, oils and textiles. EDMUND W. TABELL WALSTON & CO. i

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Tabell’s Market Letter – May 27, 1955

Tabell’s Market Letter – May 27, 1955

Tabell's Market Letter - May 27, 1955
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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,heddl OfFICES COAST TO COAST COIIINECTfC BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER May 27, 1955 At the week's high of 425.66, the Dow Jones industrial average had' recovered ,over 70 of the decline from the April high of 432.76 to the low of 412.60. The rails, at 158.90, had recovered approxi- the same percentage amount of the 8.87 point decline from 162.60 153.73. Volume has been relatively small on both the advance and dec line. – It now appears probable that the lows of mid-May will hold and that the market has already embarked on its traditional summer rise. My technical indicator has not yet reversed the sell signal of April, but -i't is almost-cert-ain that-a'buy signal It- is. – sometimes necessary to anticipate a coming signal and it might be wise to do so in this instance.- Just how far a summer rally can carry is problematical. One thing is certain, however. The advance, if it occurs, will be extremely selec- tive. Technical patterns of individual issues vary from strongly bullish almost as strongly bearish. Selection will be most important. In a market sense, I would be inclined to lighten commitments in the 435-450 area. At that level, the averages would be adequately priced on ohe basis of present earnings and dividends and it would be normal to expect at least some consolidation when that level, or its 'equivalent in individual issues, is reached. Below are some comments on individual issues on our recommended list Allegheny Corporation (9), originally recommended at 3 3/4, has moved above 9 again. The Interstate Commerce Commission has authorized the company to issue new preferred in exchange for outstanding preferred. If the exchange offer is accepted, arrears of 130 on the present preferred will be eliminated. Would continue to hold Allegheny common. Indicated objective is 11-12 for intermediate term and 17 for longer term. Allegheny Ludlum Steel (45) remains one of the most reasonably priced – . stee.l i titanium lend long term appeal. Increasing earnings indicate the possi- bility of a year-end extra. Yale & Towne (65) originally recommended at 45, has broken out on the upside of the 53-58 area. The intermediate term objective is 68-72. The recent high was 65. The longer term objective is 104. The dividend has been increased to 75 quarterly. Earnings for 1955 should be sharply above 1954 results. Pan and Am Ib e'CrlibcansinWcoerldDeAceirmwbaeyrs. (20) has h'eld in a trading shelf between 20 1/2 An upside penetration of this area to reach 21 would have considerable technical significance and indicate a possible advance to the 25-29 area. The long term indicator is above 40, but there is supply between 20 and 30 that may take time to penetrate. For new purchases the following issues have shown the best technical action and would recommend that new commitments be chosen from the list below Price Present Recom. Price Advice Stores 38 58 Buy for 78. Goods 26 30 Buy for 44. Oil Calgary & 59 16 – – 1559 Buy for long term gain. Buy -f,or long –to-erm Cities Service 38 50 Buy for long term 81. Ind. 33 44 Buy for long term 70-80. Eagle Picher 22 32 Buy for long term 61. Hewitt Robins 25-30 36 Buy for 43,then long term 85. Lion Oil 35 49 Buy for growth. Mont.Dak.Util. 26 27 Buy for long term 45-60. Penn Salt 45-48 48 Buy for slow 69. Simmons Co. 36 45 Buy for long term 71. EDMUND W. TABELL WALSTON & CO. J iI — —-

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