Viewing Month: June 1955

Tabell’s Market Letter – June 03, 1955

Tabell’s Market Letter – June 03, 1955

Tabell's Market Letter - June 03, 1955
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Walston 5- Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO ISw,.,I..d) OFFICES COAST TO COAST COlNECTEC BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lEnER June 3, 1955 On increasing volume, the market has continued its advance. At the intra-week highs of 430.25 and 161. 84 both averages were approaching the April highs of 432.76 and 162.60. As anticipated, my intermediate term indicator has signalled a buy. This occurred on Thursday. All technical indications now point to a further extension of the rise and the ment of new high territory very shortly. The upside projection on the industrial average is 435-450. The rails should reach the 168-174 However, discrimination as between groups and individual issues is assum- ing increased importance and should persist as the dominant force. Tise- is being -by – Second . quarter results should better than even the excellent first quarter returns. Earnings on the Dow Jcnes industrials for the first quarter were roughly at the annual rate of 32.00. This compares with 28.05 for 1954. It is possible that earnings for the full year of 1955 might reach 33.50 to 35.00. At the present 32.00 rate, the Dow industrials are selling at 13.3 times earning. This is not an overly high ratio. In 1946, the ratio was over 20 times earnings. On the dividend side, the picture is also favorable. Cash dividends for the twelve months ended March 31st totalled 18.39. This compares with 17.47 for 1954. The annual rate for 1955 will most likely be in the 19 – 20 area. Just how much of this improved earnings and yield picture has been discounted by the rise from 255 in September 1953 to 432 earlier this year is, of course, problematical. At the present levels, the market does not appear dangerously high on an earnings or yield basis. Neither does it appear as drastically undervalued as it was during the 1949- 1953 period. The market in the past has quite often ignored earnings trends and, in fact, has moved counter to them .. That is why the tech- nical action of the market must be watched very closely over the next few weeks. A continued downtrend in volume and in the number of ad- vancing issues during a period in which the stock market averages – – reach–new andwoulC!- signal a diminishing buying urge. If this occurs, would become increasingly cautious and drastically lighten holdings, but in the meantime, the nearer term-trend favor the upside and a continuation of the traditional summer ra'ly in the selective fashion we have witnessed in the past five months. My favorite groups are chemicals, airlines, department gas, textiles, rails, lead and zinc, farm machinery, oils and liquor stocks. Allied Stores reached new high territory at 60 3/8 as did Associatro Dry Goods at 31 1/8 and Gimbel at 26 7/8. These three stocks all have exceedingly strong patterns in an exceedingly strong group. Longer term technical objectives are considerably above present levels. Black & Decker should earn over 7.00 for the November fiscal year. At a price of 62, it does not seem overvalued. The long term technical pattern suggests an eventual price objective above 100 and there is downside support at 50. The oils have been a definite disappointment so far, but I still believe they should be bought. The appear to offer only a minimum of downside risk and the upside is quite large . . One of the favorites in my list is Cities Service. -'- -.0 If you are looking for yield plus an opportunity for long term capital gains there are twenty two issues in my that yield- ing 5 or more. They are Allis Chalmers, Amerlcan Chaln, Amerlcan Radiator, Associated Dry Goods, Bucyrus Erie, Chain Belt, City Products, Continental Motors, Cornell Dubilier, Dresser Industries, Great Northern Railway, Hall Printing, Hewitt Robins, Industrial Rayon, Jaeger Machine, Joy Mfg. New York Air Brake, Raybestos Manhattan, Robertshaw Fulton, Simmons Co., United Fruit, Western Auto Supply. EDMUND vI. TABELL WALSTON & CO.

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Tabell’s Market Letter – June 10, 1955

Tabell’s Market Letter – June 10, 1955

Tabell's Market Letter - June 10, 1955 page 1
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Walston &Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEAOING STOCI( AND COMMODITY eXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO iSw,…dd I OFFICES COAST TO COAST CONNECTEC BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER June 10, 1955 JOY MANUFACTURING CO. Statistics Twenty years ago coal mlnlng was a slow laborious process. Coal Current Market Dividend Current Yield 50 .''50 – –5-.-0 .. was mined by hand machines and dragged out of the mine tunnels by slow electric cars. Then, in 1937, introduced Funded Debt Common (shs.) 2,000,000. 893,954 and pioneered the shuttle car, the first of the three discoveries that were to revolutionize the mining of Sales, 1954 Sales, 1953 62,780,000 77,780,000 coal. This car, however, produced an uneconomical situation. Coal could be taken out of the mines Earned Per Share,1954 4.08 quickly, but with hand mining Earned Per Share,1953 5.89 methods it was impossible to dig sufficient coal to use the shuttle – 1955- 50 1/2 — 23 5/8 cars to full capacity. Ee.ven years later, in 1948, came the answer -the continuous miner – a machine which dug coal and loaded it onto shuttle cars as fast as it could be ripped from the earth. The major producer of continuous miners was Joy Manufacturing Company. One would think that the saga above had come full cycle. The intro- duction of the new machine, however, simply reversed the situation that had prevailed in pre-1937 days. Coal could now be mined faster than the shuttle cars could carry out of the tunnels. Half a shuttle operator's time was spent returning with empty cars. A great deal of a loaders time was' also -spent idle-;– these- d1.1'f1-cul tie-s .–Tfie- answer 'wa-s the extensible belt conveyor, a portable system of conveyor belts which would take coal off a continuous miner and carry it out of the mine tunnel as fast as it could be dug. The introducers Joy Manufacturing Company. The above story is told for a reason. It shows what can be done with aggressive management and product development. It is precisely this type of product development that has characterized growth companies. Instead of exploiting existing markets,such companies make their own markets. A capable team of Joy Manufacturing executives is showing its ability to do this. As an example in the decade 1945-1954, Joy acquired various companies at a cost of 8.8 million. In that same decade these companies earned, after all taxes and charges, 21.1 million or approximately two and one-half times what was paid for them. It would be hard to find a better record of astute acquisitions on the part of corporate management. Perhaps the reason many investors do not realize the growth poten- tial inherent in Joy is its identification with the coal industry. This view fails to take into account two factors. First, the competition among mine operators has practically forced installation of mechanized e-quipment For example, -a- m'ine equipped with continuous miners and ex- tensible conveyors can mine about 50 tons of coal per man per shift. The man-shift average for all mines worked during 1954 was less than 9 tons. It is easy to see the enormity of the competitive advantage which Joy equipment gives a mine operator. Secondly, only 44 of Joy's 1954 sales were in the coal mining field. Intelligent product development, as mentioned above, includes the use of a company's skills in other fields where they can develop a useful product. Joy has done precisely this. It has turned its ability to produce coal mining machinery into other mining fields – notably potash – where it has put the domestic potash industry on a par with -2- foreign competition — and copper — where it manufactures equipment used on Copper Range's huge White Pine project. 90 of the It is also interesting to note that Joy produces a comprehensive line of uranium mining equipment, now being used in Canada and Rhodesia. Fages could be consumed re'citing past examples of Joy's aggressive product development and its potential for future growth; the fact that i LpJ'.oqu;.es. ai-rcraft; its expansion into road-building equipment and, through recent acquisitions, into the oil and gas industry. All of these factors give the same impressions; a vision of future growth. Yet participation in this growth is available today at almost bargain rates. Joy Manufacturing is selling today for less than ten times ten-year average earnings. Last year's earnings of 4.08 can safely be said to constitute a floor for some time to come and the results of the past few years would have been far better had government price-fixing not held income down while costs were rising. Evidence that Joy's improving earnings is seen in the second quarter results for this year. This quarter showed per share earnings of 1.40 as compared with 1.04 last year with a gain of almost 2 million in sales. Further gains are expected for the remainder of the fiscal year and these should bring earnings close to a 5 per share level for the fiscal year ending September, 1955. Much higher earnings are expected for future years. From a technical viewpoint, the stock held in a broad trading area bounded by 43 and 24 for over eight years. The ability to break Qu,Lof a levecl-,p-f, over-100. For the nearer term, the potential is 52-55 followed by 70-75 for the intermediate term. ANTHONY W. TABELL WALSTON & CO.

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Tabell’s Market Letter – June 17, 1955

Tabell’s Market Letter – June 17, 1955

Tabell's Market Letter - June 17, 1955 page 1
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., Walston &Co . ,. MEMBERS NEW YORK STOCK eXCHANGE ANO OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADElPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,',IdJr rA OFFICES COAST TO COAST CONNECTfG BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER June 17, 1955 EAGLE PICHER COMPhNY statistics It is the practice of the Eagle PicherCompany to publish Current Market Dividend Yield Funded Debt Common Stock 33 1.80 5.5 –.- 15,000,000 989,177 shs. on page of their annual report a list of the products which the company produces. A comparison oL these .back pages, for the fiscal years 1951-and 1954 proves rather instructive. Sales, 1954 Sales, 1953 Earned per sh., Earned per sh., 83,230,000 85,030,000 2.47 3.28 On the 1951 report the list of products is headed by a long enumeration of various types of painting materials. Also in a prominent position is a list of Mkt.Range 1955-51 various types of metallic products. By contrast, the back page of the 1954 annual report lists neither painting materials nor metallic products as among Eagle Picher's line. Heading the 1954 list is the company's Fabricon Products Division pro- ducing various types of automotive parts, cellophane,polyethylene food wrappers; plastics and various glass fiber parts. Another new addition to the 1954 list is the Ohio Rubber Company Division producing various molded and extruded rubber parts for use by the automobile and other in- dustries. This comparison pOints up the tremendous change which has taken place within the Eagle Picher Company over the past two years. By means of an aggressive – –m111ion,–Eag-le expansion program and has been the capital o utala-my inolfngovaenrd 30 – — smelting company to a fabricating and manufacturing company serving the building and automotive industry. The first step in this process was the acquisition in 1952 of Ohio Rubber Company which has plants in Ohio, Pennsylvania and California. The principal products of this company are molded, extruded rubber-tometal mechanical rubber products manufactured from natural, synthetic and silicone rubbers. In 1954,the company acquired Fabricon Products, a leading producer of trim foundation panels, deadener felts and other fiber products for the automobile industry. This company also manufactures wax papers, candy and food wrappers, printed cellophane and polyethylene food wrappers and molded polyester fiberglass products. Also, in the years 1952-1954 the company disposed of the unprofitable paint and metallic products divisionswhich had contributed very little to earnings prior to their sale. Other divisions, retained as a part of Eagle Picher Company, are the Insulation Division manufacturing mineral wool insulation for industry and the home and the Pigment Division producing various lead and zinc products as by-products of zinc produced by the mining division. Also operated as a part of the mining division are a-zinc smelter,three concentrating mills and a germanium plant. Germanium is the principal material used in electronic transistors which, it is believed, will eventually replace vacuum tubes in many electronic uses. It can be seen from the above that Eagle Picher, rather than being a company entirely dependent on fluctuations in metal prices, is now in a position to participate in the booming auto and building industries. It is expected that this profit will become apparent for the first time in the earnings for the fiscal year ended November 30, 1955. Earnings per share in 1954 were down to 2.47 vs. 3.28 in 1953 and 4.08 in 1952. Sales, however, were off only 2 in 1954 despite termination of war contracts and a .. -2- temporary depreciation of income due to the discontinuance of metallic products and paint division and the fact that the highly profitable Fabricon operation was in operation for only five months of the fiscal year. With Fabricon contributing a full year's earnings and with a sulphuric ..acid plant- I,S net, a substantial gain in profits is expected for this year. This is borne out by the February quarter results. During this period, the company's sales increased to 26.2 million vs. 15.1 million in the like 1954 period. Per share earnings rose to 711 vs. 321. The rise in zinc prices would also have a good effect on 1955 profit margins. With improving earnings in prospect for this year and the stock still yielding better than 5 on the recently raised dividend, the Eagle Picher shares have attraction over both the nearer and longer term. It would seem that it is logical to expect the earnings to be valued somewhat higher than in former years due to the change in the product line of the company. In summary, Eagle Picher appears to be an excellent commitment for both income and growth. From a technical standpoint the upside penetration of the broad 17-28 range is very constructive and indicates an intermediate term 61 followed by 97. For the nearer term an upside penetration of 35 would indicate 40. – Due J-oy Manu facturing was reported in last week's letter as 2,000,000. The correct figure is 20,000,000. ANTHONY VI. TABELL vIAL,sTON & CO. '-

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Tabell’s Market Letter – June 24, 1955

Tabell’s Market Letter – June 24, 1955

Tabell's Market Letter - June 24, 1955 page 1
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,, Walston &- Co. t.4EMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILACELPHIA LOS ANGELES SAN FRANCISCO LUGANO Sw,'wld I OfFices COAST TO COAST COlNECTfC BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lEnER June 24, 1955 On September 2nd, 1948, with the Dow-Jones industrial average at the 184 level, I expressed the opinion that the market was greatly undervalued because of the extremely high yields and fantastically low price to earnings ratios then prevailing on better quality common stocks. I further stated, that based on my technical work, I could envision first an advance to above the 1929 high of 386 and finally to an bbjective of 450 by the mid-1950s. This opinion was received with considerable skepticism at the time, but the 450 objective was finally reached just about on schedule at the week's high of 451.49. Strangely enough, the upside objective of the recent 420-385 base area is also approximately 450 so it may be that around this level at least a temporary top may develop while the market consolidates the sharp advance that has occurred from not only the November 1954 low of 352, but also from the September 1953 low of 255. On the unfavorable side, the market appears adequately valued if not actually overvalued on the basis of projected 1955 earnings and dividends. Also, recent breadth of the market action based on VOlume, advances and declines and new highs and lows has been at least negative if not actually unfavorable despite the attaiRment of new highs by the market averages. Also, the recent sharp advance has brought my technical indicator into overbought territory and a temporary correction seems in order. On the favorable side, at least temporarily, there are only a few issues that appear to have built vulnerable distributional tops. If such tops are to form, more time will be needed. Furthermore, there are still many issues that continue to indicate higher levels over the nearer term. It would appear advisable to continue the policy recently advocated by this letter. The industrial average may hold around the 450 level for quite some time, but I would lighten holdings of individual issues if individual upside objectives are reached. I would build up some cash reserve and make new commitments only in groups that appear to be in a definite long term uptrend and appear to be not too vulnerable on the downside. In my opinion, the airlines are such a group. The industrial average has advanced 76 from the 1953 lows, but the airline group has advanced 178 and I expect this favorable relative strength action to continue over both the near term and longer term. The action of individual airline issues has been quite diverse. Over the past twenty months, Capital Airlines has shown the best price action with an advance of over 320 while United Airlines has advanced 119 for the smallest rise in the group. My favorite airline issue from a technical point of view, is PAN-AMERICAN WORLD AIRWAYS which nas shown slight1y,below average action with an advance of 150. In my opinion, it should show increasingly better price action from here on. My technical projection is 25-29 for the intermediate term and 45 for the longer term. Present price level is around 20. The technical Picture is very strong and the 19-18 level is a good support zone. The strong technical market pattern has apparently been formed because of developments that appear to be favorable for both the near and longer term (1) Traffic is in a sharply rising trend. The first quarter results showed a 26 increase over the 1954 period in passenger miles flown and commercial revenues reached a new high of 44.7 million for a 21 gain. The expanding tourist service and augmented flight capaCity through delivery of new planes indicate a continued improvement. (2) The recent reductions in air mail service payments and subsidies appears to be an unfavorable development but, in my opinion, this is DOt entirely true. A gradual elimination of subSidies and less dependence on air mail revenue would be constructive. The trend appears to be working in that direction. In 1954, mail receipts were only 18 of gross operating revenue as compared with 57 in 1940. Subsidy payments are de- ,, –,– -2- clining each year and it is possible that they can be entirely eliminated in the not too distant future. This would appeal to investors who have avoided the stock because of the subsidy stigma. It would mean that this company, although competing with highly subsidized foreign carriers, is able to stand on its own feet. (3) Pan-American and W. R. Grace Steamship each 50 of a South American airline known as Panagra. The Justice Department has brought an anti-trust suit in order to force both companies to sell their Fanagra holdings. It is possible that this suit might be settled by a consent decree and never brought to court. At the same time, the whole controversy on air service between New York and Latin America might be finally settled which would be most likely beneficial to all concerned. (4) The direct service from Chicago and Detroit to Europe via the Great Circle Route through Newfoundland was inaugurated in 1954 and has extended Pan-American service from the United States interior to foreign points. Other important applications to the C.A.B. are pending such as (a) non-stop service New York to Mexico, (b) Los Angeles to Europe via Mexico and Cuba, (c) Pacific Coast cities to Europe via the Polar route. (5) Revenues have shown steady growth since the end of World War II. In 1954, passenger revenues were almost twenty times greater than just before the war. This growth should continue. Last year for the first time, the airlines rephced the steamship as the principal medium for J overseas travel. Pan-hmerican in 1954 carried 28 of all overseas passengers who travelled by air or by sea to and from the United States. Earnings should show a gradual increase. Cash flow earnings before depreciation in 1954 were about 4.76 as compared with reported net of 1.69 which included 481 non-recurring profit from sale of planes. Fre- sent cash flow earnings are probably over 5.00. Company reports annually only, but first quarter earnings are estimated at 551 with profit from sale of planes included,but excluding subsidy. 1955 earnings could possibly total 2.25. These probabilities,together with an attractive technical pattern, suggest purchase of the stock as the outstanding airline equity. American Gilsonite, which is jOintly owned by BARBER OIL and Standard Oil of California, expects to begin construction sometime this Fall of a new 10 million plant which will produce high-test gasoline and metallurgical coke from Gilsonite deposits. Gilsonite is a form of asphalt found in a natural state in eastern Utah. Barber Oil, which is one of the issues in my recommended list, appears to be in a position to benefit from the interesting potential in Gilsonite. Estimated earnings for 1955 on two of the issues in my recommended list are being revised upward. Expect 7 – 7.50 a share earnings on Allegheny Ludlum Steel as against our previous estimate of 5.00. On Joy Manufacturing, the projection of close to 5.00 earnings for the year endin-g September 30th might be changed to c loser to 5.50. EDMUND W. TABELL WAlSTON & CO. -r

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