Viewing Month: November 1955

Tabell’s Market Letter – November 07, 1955

Tabell’s Market Letter – November 07, 1955

Tabell's Market Letter - November 07, 1955 page 1
Tabell's Market Letter - November 07, 1955 page 2
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', 11onday,. November 7, 1955 ALL WmES DUE TO THE FACT THAT MR. EDMUND W. TABELL IS OU'l' OF TOWN, THERE WILL BE NO BLUE MARKET LETTER ISSUED THIS WEEK. FOR MR. TECHNICAL f1ARKET OPINION SEE TODAY'S EDITION OF THE WALSTON LETTER. Anthony W. Tabell, N.X. HovelIlber 7.1955 !abell's Technical Market Opinion After a period ot Sidewise action. the market moved sharply ab.ead this week reaching an intra-day I11gh of 468.70 In the Dow-Jones Industr1al Average and 152.95 1n the rallo. As prevlouol noted, this strength could continue through the rest of November \tUh the objective being somewhere 1n the 465-475 zone. Toward the end ot the month. cross-currents .' cauaeli by tax-losa aell1ns could oome into the market caUSing some Irregularity-. Until there 16 8 testing of the recent there should be no change in basic investment policies 8S outlined 1n recent letters and current strength should be used to sw1tch out Of volatlle, unfavorabl1 situated holdings. . ./ '… , T , ,' , \

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Tabell’s Market Letter – November 11, 1955

Tabell’s Market Letter – November 11, 1955

Tabell's Market Letter - November 11, 1955
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— Walston &eo. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO ISw,h.d) OFFICES COAST TO C'JAST CONNECHC BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER November 11, 1955 Last week, both the industrial and rail averages reached the highest territory since the Eisenhower break. The industrials, at 478.70, were with- in shooting distance of the 489.94 high of September and the rails, while showing less favorable action, were also not too far away from the 165.00 high at last week's peak of 160.19. The strength of the past six days brings up the possibility that the market may have reached its low in October at 433.19 and 144.07. This would imply that the uptrend from October, 1953 is still intact and that the almost 12 decline of September-October was-an term,de- , cline in a yet to be completed bull market. There is something to be said in favor of this contention from both a technical and fundamental viewpoint. At 433, the industrials had practically reached the 430-420 area mentioned in this letter since late Summer as the initial support level. Certainly, business news and earnings and dividends are excellent and the continuance of these favorable trends at anywhere near the present rate could support a higher stock market level, particularly if investor confidence remains high. It is investor confidence that may become the deciding factor in whether the bull market will continue on to new heights or whether a downtrend carrying to new lows has already started. Recent strength seem- ingly indicates that the confidence factor has improved, but it is much too soon to be certain. It appears doubtful that enough time has elapsed to build up a new base for a sizeable extension of the advance. Our technical work a few weeks ago indicated a rise to the 465-475 area with an outside possibility of 480-482. These objectives have been about reached and a testing of the 463-450 support level may be the next move after a mild extension of the present rise. This may be brought about by the coming year-end tax loss selling. The recent rise in the averages has been spearheaded by a small number of issues like Standard Oil of New Jersey, duP,ont- and -Qeneral-MGtDI's anG–there-a-re–sti'B.-a- large-number''of- issues that are selling 10 or more below the 1955 highs. Also, while improving slightly recently, the internal action of the market is not very impressive. In the main, the breadth-of-the-market graphs of the 10-week and 25-week advances and declines, volume and new highs and ne lows constructed by Market Action,Inc., remain on the unfavorable side for the longer term. Also, some of my technical graphs indicate lower levels on some individual issues and that other issues have potentially vulnerable patterns. All in all, a cautious attitude is still indicated and I would continue the policy recommended before the September break of taking profits in long term trading accounts on strength. Over the past four months, the industrial average has built up a large congestion area in the broad 489-433 range. A breakout of this range could be very important marketwise and until the direction of the penetration is clearer than it is today, a cautious attitude and the building up of some cash reserves appears to be a wise precaution. Of course, as this letter has been repeating for years, the action of any average is a very poor indicator of the action of individual stocks. Over the next several months, I can easily visualize a downward move in the averages with some individual stocks advancing. lith this possibility in mind, I advise the following policy under present market conditions. (1) Definite elimination from all accounts of marginalyspeculative issues that are of steep price rises. Would also eli- minate on strength, better-grade issues that appear to have temporarily advanced too rapidly and are selling above normal price/earnings ratios and yields. It is from these two groups that a cash reserve should be built. (2) Continue to hold and add to holdings in defensive issues that are still selling at reasonable price-earnings ratios and still offer good yields. Issues of this type could advance ,while the averages are declining. (3) Continue to hold and add to holdings on minor weakness issues that are slowly bettering their quality and are still selling on a reasonable basis. Our recommended list contains quite a few issues like Allegheny Ludlum, American Potash, Dresser Ind., Eagle Picher,Joy Mfg., and Simmons Co. that have reached new high territory since the September market break. EDMUND W.TABELL ,I

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Tabell’s Market Letter – November 15, 1955

Tabell’s Market Letter – November 15, 1955

Tabell's Market Letter - November 15, 1955
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Walston 5- Co. MEMBERS NEW 'fORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO ISw,herl.,d) OFFICES COAST TO COAST CONNECTEC BY DIRECT PRIVATE WIRE SYSTEM EDMUND W. TABELL INSTITUTIONAL LETTER November 15, 1955 In my letter of late October I expressed the opinion that the market was showing improving technical action and, with the issuance of favorable third-quarter earnings and–dividends, could show advancing tendencies into November with the Dow-Jones industrial averages reaching possibly the 475-480 level. The advance has occurred and has carried semewhat further than I anticipated. The industrials have reached an intra-day high of 490.35 as compared with the September high of 489.94 and have closed the opening gap of September 23rd. The rail average has also advanced sharply to 163.20, as compared to the 165.00 reached in December. I would be inclined to believe that the market has advanced about far enough for the time being. The rise in the averages has been brought about mainly by a relatively few stocks in the averages such as duPont, General Motors and Standard Oil of New Jersey in the industrials and Union Pacific in the rails. Admittedly, these stocks are of prime quality, but their influence on the averages has been disproportionate. A large number of stocks are still selling considerably below their respective 1955 highs. Breadth-of-the-rnarket action continues relatively unfavorable. The number of weekly highs is illustrative and shows how selective the market has been and how deceptive the averages can become if used as a broad barometer. The following figures are from Market Action, Inc. The figures used are the largest number of weekly highs reached during the month and the highest price the industrial ayerage has reached monthly. Dow-Jones Weekly I Month Industrials Highs April 432.76 280 July 471.15 225 September 489.94 187 November 478.70 68 The November figures, of course, were for last week.Other breadth-of-the- market data, such as upSide-and downside volume and advances and declines – on both ten-week and twenty-five week moving averages also continue able from a longer term point of view. These indicators could reverse them- selves, of course, but until they do, a continued cautious attitude is ad- visable. These same indicators performed just about as they are doing now in 1946. In May, 1946, the industrials reached a new high of 213 as with the February high of 207 at the same time that the breadth-of- the-market indices were reaching new lows. If similar action were to occur now, it would be an unfavorable development. In other words, a new-high at this stage, unless accompanied by an abrupt reversal in breadth-of-the- market data, would be an unfavorable rather than a favorable development. In my opinion, the following course of investment action should be followed at this stage of the market pattern in order to assume a more de- fensive position. – (1) All issues that have sharply should tre ri- quidated. Also would avoid low-yielding and high price-to- earnings issues that have advanced too sharply. (2 ) New purchases should be concentrated in defensive issues that are selling at reasonable price-to-earnings ratios to yield close to 5. (3) On minor price weakness, add to holdings in issues of secondary- companies that are 'slowly improving in quality and growth possi- bilities. There a few issues of this type available at reasonable price-to-earnings ratios and yields. Market action could be diverse over- the next few months. It is entirely possible that market averages could decline while the issues of the last two types mentioned above could be in an advancing phase. EDMUND VI. TABELL WALSTON & CO. This may memorandum n not to be hae an Interest in lome construed or all of , an offer or the securities 101l(lloilllon of offen to mentioned here.n The b IIY or a II any secur, t'In From foreqo,,,gd m,hrllli h,U bej tiamt'e,dtonb1,.mu,setetWInSd!eaIhdlomntoat&tfeorCreoc01l.oso'enrioIarnnmdyaeplploeanlr'dltneoennrt lytheIet ol1,5 bil5ed upon informatIon betleved reliable but not necusanly complete, IS not gUdran ee as accura e or Ina,

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Tabell’s Market Letter – November 18, 1955

Tabell’s Market Letter – November 18, 1955

Tabell's Market Letter - November 18, 1955 page 1
Tabell's Market Letter - November 18, 1955 page 2
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' . , ' '.' J;' i, Walston &- Co.Inc. ' NEW YORK MEMBERS NEW YORK STOCK EXCHANGE ANO OTHER LEADING STOCK AND COMMODITY EXCHANGES PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (SWITZERLAND I , TABELL'S MARKET LETTER November 18, 1955 . -; Statistics AMERICAN CAN COMPANY With the industrial average . Current Market 46 ing at a relatively high price , )Current Dividend 2.00 earnings ratio, it seems wise to ,, .' 'Current Yield '.. . Long Term Debt . 1.75 Cum.Pfd.Stock -( 25;-Par) – – . Common 4.4 65,000,000 – 1,649,332 ' shs. '- 10,885,591 shs. recommend that new equity be limited to high quality stocks.ip companies with long unbroken records of stable earnings and dividends .. adding . to our recommended list, is an JNet Per Share, 1955 Net Per Share, 1954 3.00 (E) 2.53 issue of this type. , American Can is the largest or in the metal container industry ';Sales, 1955 700,000,000 (E) and, together with its principal, . JSales, 1954 652,400,000 competitor, accounts for over 70 '' of the total market. Its al'lnual '. rr…3;'1Mkt. Range 1955-54 49 1/4 – 35 3/4 sales volume ranks it among the ' fifty largest United States in- -; , !',dustrial corporations. Its favorable trade position in a basic industry ., it to maintain a steady, growing volume of sales. At its current price,American Can is selling at about 13 times earnings to yield atrout 4t. On an earnings basis, this is not too far out of line iwith a ten-year average PIE ratio of 12.7 times and from a yield viewpoint,' .;lthe income is extremely generous when compared to a ten-year average 4 ,. yield. This would seem to be a low price to pay for-a company which has '(, lbeen able to multiply sales better than two and one-half times since 1945 ;and at the same time suffer only a small shrinkage in profit margins. , Perhaps the reason that American Can is still on the bull market, is a tendency to regard 1952-1954 re- .' suIts as indrcative of the' company I i-future earn-ing-power -It ;- that this is not the case. In 1954 especially, results were hampered by an , ;iunusually poor crop year and an unusually cold summer which affected be&r During this period,hmerican Can was faced with heavy capital out- . ; 11ays which in 1954 ran to 36 million. As of this writing,a great deal of – rthis capital expenditure has been completed and should begin to be reflect- ed in expanded sales and earnings. This reflection should commence with .'; 1955 earnings which totaled 2.46 for the first nine months and should .. better 3.00 for the year. Further advances are expected in 1956. v .'.! r a t An ion e xpr las e t ssion mont h of o f Ma a nage 5eJ ment J s quart c er on ly fidence dividen in d i the ndi c future ating a was its 2.00 dec laannuai- 1rate.Since,based on 1952-1954 results, this would exceed the normal pay- ;, tout ratiO, the indication would be that Management feels confident that ,.i future earnings will cover the dividend by a wide margin. It is interes'B– f. ;, .'j ing age to of note that,except tin,American Can for has the war years with their never been forced to cut accompanying its dividend shortsince . It is true that kmerican Can faces a number of basic problems. First , of these is the ever-present possibility that the supply of tin may be -, t cut off. It is estimated that ) entire free world, and if the only 20 years J supply of tin exists Far East sources of supply were cut in the off thIs ,j . ; would be decreased to 5 years.To meet this threat the company has organ- ; ;.' ized an Operation Survival. Under this operation constant research is – ..; V ,being undertaken to cut down the amount of tin being used in metal This has progressed to the point where the amount of tin in the average . can has been lowered considerably and in certain specialized uses, such r,',;. as motor oil cans, enamel lining. It tin has is to be been entirely expected that eliminated in the packaging favor of industry an will be !,/'., able to cope with the problem of a depleted tin supply as the need arises. ; il',.'j On the plus With supermarkets contain but also side is the growth in use of all types of packaging. dominating the retail scene, a package must not only sell its product. Furthermore, with high consumer difr- , '1 , 'posable income, the consumer is more disposed to pay a premium for con- W, –; J letter 1.5 not. and under no clrcurntances IS to be eonatMled .., an offer to totll or .. aolicitabon to buy any referred to herein The Information erelft 1.5 not uar.. as to &.eO!uracy or et'lmpietenf'!!!!1 and the (urnlShlng thereof IS not, and under no cU'cuml!ltanees 1.3 tn beeonstf'ued M a representation r Wal'lt,m A C(j. lnf All or 0plnwn an t.ubjt to ehangt!' ',ltil.out notloe Walaton II; Co., Inc., or any Officet', Dlrt!'Ctor ot' thereof. may nve Iln IntRre'lt In the seeuntle mentIOned herein. ThIll market letter it. and -pt'esented merely B.l!I a It'eneral, In(ot'mal O!ommentary on dllY to day market and not a eomplett!' analYSL!ll Adilt.\ona\ Lnfonn&tIOD With respect to any t.unties refened to herein 1IVl1l bot fUrnl.Shed UDOn reql,le!Lt. WN 301 J J. 's . … …..d -2- venience, such as that afforded by aerosol bomb cans for insecticide, shaving cream and other products. – Another plus factor for American Can lies in the inroads which metal containers ,may be-expected -to makeonother-typesofpackaging. Perhaps one of the most important of these inroads may be in the soft drink field. There has been disappointment recently over difficulties which have been encountered by canned soft drinks. In many cases, these have been due to the fact that the product marketed was unknown or even inferior. Another block to consumer acceptance of soft drinks in cans is and has been the excessive cost of a can as compared to a reusable bottle. With the recent general rise in the price of soft drinks, however, this cost becomes a smaller percentage of purchase price and is more liable to be borne by the consumer as a premium for convenience. It is easy to be disappointed by the progress which has been made so far and to forget the fact that development of a pew market is a slow, gradual process. Pn historical comparison would be the growth of beer cans which has taken almost 20 years to reach its current status as the major beer container. It is quite possible that canned soft drinks will enjoy the same slow steady growth. Meanwhile, research by American Can and its competitors is constantly developing new markets which, added together, present sub- stantial growth potential. Among these are the aerosol bombs mentioned above, cans for frozen foods, fiber and metal biscuit containers and a host of others. These and new products still in the development stage .. From a technical-point of view, the present upside objective for American Can is 6-3-70 with excellent support just below the current market at 42-40. The pattern could broaden and point to eventual much higher levels. On this basis, the stock would seem to be an excellent comrnitment for all types of investment accounts. AWT/amb EDMUND 'II. T..BELL vlHSTON & CO.

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Tabell’s Market Letter – November 25, 1955

Tabell’s Market Letter – November 25, 1955

Tabell's Market Letter - November 25, 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 ISw,'wld) OFFICES COAST TO COAST cO…. NEcnt. BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER November 25, 1955 The market may be in the process of building a gradual broadening top in the form of expanding highs and lows, For example, the July high in the Dow-Jones industrials was 471.13 and the September high was 489.94. The hUgUSt low was 445.67 and the October low was 433.19. This potential top formation usually is completed in five phases – three of advance and two of decline. Four phases have been completed and we now may be in the last advancing phase. This advance could continue to a new high at the 505-515 high-is made the .a-moderate,-g;ip to the 470 support level is problematical. The rails have a similar pattern and also appear to be in an upward move to at least the 170-172 area. The average reached a new high at 168.69 on Friday. Of course,individual issues will have moves entirely independent of this general pattern. One of the poorer-acting industrial groups over recent months has been the air transport industry. Without exception, the leading stocks in the group are substantially below their 1955 highs and most of them have conti- nued to be rather listless market performers. After reaching a June, 1955 high of 668.9, the Standard & Poor Air Transport average reacted to 520.0, a decline of 22 from the high and a 38 retracement of the advance from the September, 1953 low of 274.1. ' The ostensible reason for this weakness lies in the huge capital ex- penditures which are going to become necessary as airlines enter the jet and turbo-prop age. To gain an idea of the magnitude of this it is only necessary to look at the announced expenditures versus the present stated capitalization of the airlines. Eastern Airlines,for example, has announced it will spend 350 million on jets and turbo-props. Eastern's present capitalization is under 100 million. Pan will spend 269 million versus a capitalization of 140 million; United 175 million ver- sus 145 million. It is bertainly true that the above expenditures may havec-a somewhat res tric t-ive–e-f-f'ect-ever–the-nearerc'1e-rm-. -To -1-0ok only a t- the less salutory effects is taking a rather short-sighted and one-sided view, however. This view fails to take into account the one basic fact which is fundamental to the entire expansion program, — the fact that if the new planes can earn money at a better rate than the cost of the capital which pays for them, the expansion will be of benefit to the present stockholders. There is no way of being certain at this point whether they will be able to earn at such a rate, but the facts seem to indicate that the possibility is excellent. The Civil Aeronautics administration recently issued a staff study forecasting the expected growth in the airline in- dustry over the next decade. It forecasts a doubling of passenger traffic and a tripling of freight traffic. It estimates that airlines will account for 50 of the total public transportation market as compared with about 29 presently.It estimates that U.S. airlines will carry 6 million tra- velers overseas in 1965 versus 2,400,000 in 1954. And many analysts feel that these estimates are It becomes evident that the present expansion and modernization programs are necessities and carry with them the strong probability of substantial earnings growth. It is also worthy of note that American's banks and insurance companies have been enthusiastic enough about the airline's expansion to provide senior capital freely. Eastern has recently arranged-for-90 million and American for 75 million of credit with two large insurance companies. It would thus appear that the current weakness in airline stocks may well be regarded as only a temporary factor. This would mean that at current PIE ratios of around ten times earnings, air transport equities provide attractive prospects for longerterm capital growth. Two outstanding vehicles for participation in this growth are, in our opinion, Pan 'irways (17), which has a long term ob- jective of 45 and, in the domestic field, United Airlines (37, with a long-term objective of 125. EDMUND W. TJ,BELL WALSTON & CO. . TM, Th., m.mor,ndum ,s not to be (ol'l1tru.d .1 ,n off.r or lOh clt.t,on 0f off,'1 t0 b U'/' 0r I.11 n'I' u..uhd.1tiuM,nFromr,pti.mr,.dto timul. UW.h lomn .tIt.rCo0 I 0In, fo'nr'ml' .tpio,rntnolnt lyth , r,of It me, h…..n ,nt,rul ,,. 101'1'1' or .11 of th, Mu,I,i m.ntloned h.,.ln. b.n.d IIDon ;nfo,I,o b.h ….d r.Ibl. but not neee…,lIy complete, flot qfuore.rCelOt','e''. m.t.tI … e. IICCW 0' fin.f , .nd ,. not ,nt,nd,d to for,elolt ,nd'D.nd,nt ,Mll/orV

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