Viewing Year: 1956

Tabell’s Market Letter – January 06, 1956

Tabell’s Market Letter – January 06, 1956

Tabell's Market Letter - January 06, 1956
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Walston &- Co. Inc MEMBERS NEw YORI( STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,hId I OffiCES COAST TO COAST COlNECreC BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lETTER January 6, 1956 Statistics CORNELL-DUBILIER ELECTRIC CORF. Current Market Current Dividend Yield 34 2.10 6.2 Certainly a corr.pany whose stock yields between 6 and 7, whose product can be expected to enjoy huge growth in demand during the Funded Debt 5.25 cum.pfd.stk. Common Stock Earned per Sh.,1955 Earned per Sh.,1954 3,650,000 11,561 shs. 512,390 sh-s. 3.41 3.25 years ahead, and whose management has compiled one of the best competitive records in its field, deserves scrutiny as an investment medium Doth for–defensive -valu;- – and capital appreciation potentialities. &uch a stock, we believe, is Sales, 1955 Sales, 1954 34,955,172 37, 149,778 Cornell-Dubilier Electric Corp. CDR's principal products is the capacitor, a small device used to ' Market Range-1955 37 3/8 – 9 store up electrical current and release it as needed in an electronic Paid in 1955 Sales and earnings are for fiscal year ending Sept. 30,1955. circuit. A few statistics give an idea of the extent to which these devices are used. In a 25-tube black-and-white television set, there are approximately 100 capa- citors. One of the new electronic computers has roughly 4,000 capacitors and it is interesting to note that in the electronic equipment used aboard a heavy bomber, it is estimated that there are approximately 50,000 capa- citors used. While the basic cost of each one of these component parts is relatively small, the quantity used brings the total expenditure for these parts to a substantial figure. It is the TV field, howeer, which can be expected to provide a- great deal of. the ..intermediate-term growth in capac.i tordemi'l.nd .Blak.;.. and-white television set production will decline next year, t is tru; perhaps from 7,700,000 sets to below 7,000,000. 1956, however, will probably be the first year of important color TV production, with output estimated at close to 300,000 sets. The main point to keep in mind-is that color TV sets require three times as many capacitors as black-and- white sets. Thus, CDR's sales should remain substantially the same in 1956, or perhaps even rise slightly. ,In 1957 and beyond, as color TV eventually begins to replace black-and-white, CDR sales could show terri- fically wide gains. ' This growth potential appefrrs to be currently available on the bar- gain counter. Currently, Cornell-Dubilier is selling for only ten times earnings. Due to the company's policy of paying an extra in each quarter, it is difficult to project the exact dividend rate,but it should at least equal the 2.10 paid in 195 Some reason for the skeptical view of CDR's earnings taken by the market may be found in the fact that the company's sales have declined from3t million in 1953 to 35 million in the year ended September 30, 1955. Yet these figures do not tell the whole story. The fact is tqat 75 of this sales drop is accounted for by slackening defense sales, which now account for only a small fraction of volume, and that non-defense sales actually improved during the last year.-Grounds for pessimism may also be found in the potential decline in TV set production next year, but this is busily offset by anticipated gain in color TV output, as out- lined above. hnd despite the fact that CDR operates in a highly competi- tive field, its recent record in that field speaks for itself. Further plus factors are inherent in the huge growth potential in other applications of capacitors which are used in most all electronic equipment. It would therefore appear that, on balance, Cornell-Dubilier offers attractive participation in future growth of the electronics in- dustry, coupled with unusually high current income. Technically, the stock held in the broad 36-29 area for most of 1955. The upside penetration indicates an eventual 54. nThmk'tlt,,,,,,,,cc.Trtd.,o7.,,um',,,oon,uuu,,oWOEDMUN\'';!RBEi,L-,,r,-,,-,rtwha-,-onTh'-'-'ro'mat'o l .conUlne.1 herein Ll\ by W.I'itun &. Co, not lor. gAulalreanptreeesrlll\aO.sntooareoepuIrnaI,oyn aarreeomupbfJeenclt'!!t!loJ!!chaannd2tehwe tttubronulSt hnlontlfIcteh.erWa'll1lStonntt.6.; andu'flller'1i'o Co.., Inc, or e'iell!JfrlI any Otfuf!r, to M construed all, a representation Director or Srockholrler thereor, may halre an Int..re-\t In the e'(urltl mentioned Tem Thill muket if!lter is Intended and presented merely u a p;eneral. Informal commentary on lay to day market new and nt I\ a complete analyn'! Ad,huonal Inrormauon 'nth rHpeet to any auntle'-!L -r-e f-e r r e d- to herem Wlll . be furnl!!Lhed upon request WN 31)t 1\ -.

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Tabell’s Market Letter – January 13, 1956

Tabell’s Market Letter – January 13, 1956

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aA- . Reprinted from. ,. . COMMERCIAl. and 3 q FINANCIAL CHRONICLE Thursday, December 29. 1955 to The Stock Market Outlook Forl9S6 and Beyond By EDMUND W. TABELL Director of Institutional Research Walston & Co., Inc. Members N. Y. Stock Exchange Mr. Tabell predicts much higher market levels for IODg. '. term, with iDtervening readjustment period. For 1956, based on statistical, technical, aDd psychological factors, expects highly selective action raDgiDg from a 520 DJ Average top down to a low of 430420. Looking . . ahead to the 1958-1960 period-with buUish elemeDts of increasing consumer income and demand, population growth, increased money supply, more favorable invest .t,. ,ment climate, long-term easy money, and technical fac- 1 lors; for s'Dsational DJ rise 10 750. As most favor. ably. simated groops, .uggests oils, Damral gas, food cbains, automatioB' issues, electronics, airlines', retail stores, better,grade Canadian oils, and nalural gas issues. As the year ends, the stock hIarket and most bUSI- ness indIcators are at an all-time high. The industrIal average- IS again near the September peak of 490 reached be- fore the announcement of PresIdent EIsenhower's Illness and appears ready to stage the tradItional year- end rally and attam new high terri- tory. The Federal Reserve Board index of industrIal activity has reached a new high of 144 of the ' 1947-1949 average WhICh is 16 points' above the level of a year ago The great maJority of busmess forecasts for 1956 predIct a'high level of activ- ity for at least the fIrst SIX months of the new year , WIth such a favorable pattern as a background, It is dIffIcult to be Edmund W. Tabell anythmg but optirmstic If we I attempt to look ahead five years, thlS optImism seems entirely justified. Four of the five long-term construc- tlve fundamental factors that I advanced ahoost 100 in 27 have contlllually stressed in Com- months. A continuation of the mercta! & Financtal Chronlde present rate of advance In the articles are still with us. They are stock market would mean a price roughly- Level of about 1,500 in the Dow- (1) The increase in consumption demand brought about not only by the Increase in consumer m come but by a more equitable dis- tributIOn of such Income. (2) Population growth m general but partIcularly in relation to the age groups In the popula- Jones industrials in 1960 which seems a bit fantastic for the long- term trend, even to a confirmed bull Ilke myself. . The price of a common stock depends fundamentally on four main factors. (1) earnings, (2) dividends, (3) bond prices and (4) mvestor coniidence. The fIrst tion. three factors are tangible and (3) The tremendous Increase change at a relatively slow rate. tn our money supply since the The last factor – mvestor confi- start of World War II and its ef- dence, is very intangible and sub- fect on earnings, dlvldends and Ject to extremes of optimism and money rates. pessimism. Investor confidence is (4) A mare favorable invest.. generally reflected in prjce-to- ment climate. The fifth factor-an easy money market – is temporarily unfavorable, but will, in my opinion, change in the event of even a ml1d business dIp. It still must be considered a constructive factor for the longer term. In addition to these constructive fundamental factors, my longterm technical work on stock mar.. ket action also presents a favorable supply and demand pattern. In my last paper in the Chronicle, published eight months ago, I predicted the possiblhty of 600 in the Dow-Jones industrial average in the 1958-1960 penod I am now inclined to raise my Sights to 750. earnings ratios, dividend yields and the spread between stocks and high-grade bonds. At periods of high lllvestor confJdence, like the present, the investor pays a high rate for 1.00 of earnings and dividends. The table below shows bow much was paid for 1.00 of earnings and dividends in three periods of stock market highs and also during November 1948 and October 1953, as compared with to- day. Additionally, in the table is the amount needed to buy enough dIvidend income to equal the in- come from 10 invested in high grade bonds. , -Per 1 00 ofJ!arns Dlv. Same Income 510 1n Bonds 1929 19.30 29.90 15.60 1960 Outlook Clearly Bullish The outlook for 1960 seems reasonably clear. However, at least as far as I am concerned, it is extremely difilCUlt to project the 1937 1946 1948 1953 1955 16.60 16.80 7.82 9.28 13.37 22.00 28.40 18.00 16.00 23.26 10.75 9.00 5.45 6.14 7.36 pattern for 1956 by itself. Cer- From the above, it can be read- tainly, it seems highly improbable lly seen that investor confidence to expect In 1956, the same rate of today necessitates paying at a increase in busmess actIvity that much higher rate for earnings and was witnessed in 1955 or to ex- dividends than in September 1948 pcct the same rate of advance in or October 1953 when my two the stock market that was expe- very bullish articles on stock -ienced in 1954 and 1955. The rate values were published In the of business increase in 1955 was Chronicle. While the ratios are two or th'ee times the long-term still below the three periods of rate wlnle the stock market has stock market highs of 1929, 1937 2' ….. ,I, .I' II , I , \ Benjamin Graham used in our momentum despite the fact that last Chronicle article, the normal the averages are advancing to new value of the market for 1956 is highs Thls divergence usually in- around 400-410. ThIS flgure- is ar– dicates either a decline or a long rived at by capItalizing the 10- ,year average earnings of the Dow- c,onsolIdatIng period.. ' Jones industrials at twce -'the f Near-Term Caution . yield on AAA bonds Since the' The action of the vanous mar- market rarely sells at Its normal ket averages also tends toward a value, 20 devlation is allowed somewhat cautIOnary attiude up and down for eIther nigh after the turn of the year, Actual- or low investor confidence. At' ly, the market as a, whole' l1as present levels, the market is' made little 'headway SInce July, A priced TIght at the top of the 20 few stocks have had sharp ad- overvaluation (480-500) for high vances while the bulk of the mar- investor confidence. , ket has moved, sideways. It is The Technical 'Pattern entirely possIble that the market Is-forming a broad distributional Since investor confidence or top. 'Tops of thIS sort take a long psychology is best measured by ,time to form. The 1929 top needed, technical market factors, it might a year to form, the, 1937 top took be instructive to outline the pres- 10 months and there-were seven ent technical pattern As noted months of congestion before the before, the longer term mdications f1946 top was'formed. Tbe present' remain favorable, but the 1956 Ipattern has the anoearance- of, a' pattern is far from certain idiamond ,or expanding top. For- From a partially techmcal ap-' Imations 'of I th,s type usually con-' proach to business and banking rsist of fIve phases. Four have conditions we note a few signs of already been completed.', The a possible change in the business 'present advancing phase may be activity pattern, A study of eight i,the fmal step business indicators that usually The first phase was the advance change their trend some SIX Ito the July top at approximately months or so before general busi- \;470 The second phase was the ness, reveals that a number of to the August low of 445 these indicators are beginning to !,The third phase was an advance show signs of a possible change In the September high of 490, trend later in 1956 These indi- ,above the July high The fourth cations ,are as yet far from Iphase was the October declIne to sive but do suggest a certaIn a decline below the previous' amount of caution 'low of August and the fIrst time An analysis -of bank credW 'sInce the advance started in changes also indicate a cautionary 10ctober, 1953 that a prevIOUS attitude. Some I of this work indi- had penetrated The fIfth cates that it is quite unlikely that iphase IS the present advance from a major new leg to the bull mar– lthe 0 eta b e r low has ket can develop without either a' ! equalled the September hlgh of Iprior correction or a long 'consoli- 1490. ' – dation period. , If, the pattern of expanding Breadth-of-the-market highs and lows continues, the a study of the market the as eivnitdeernncael da-cbtyionv'oOl-f ;market 'should Iterritory on the reach new present and high reach Ume, advances and declInes; new Ithe uptr,end line connecting the high. and lows, oda' lots, etc 470 and 490 highs of July and rather than a study of the'market September. This uptrend line now a'verages, indicate that the mar- stands at about 508 but will reach liet shows signs of waning upside 510 by the year-end and about 520 4i (,(.l.' '6. 'J.,j' I J i 1 by early February. If such an ad- work to complete. tn most in- vance occurs, it will most likely stances, these issues are ones which be accompanied by a heaVIer vol- have advanced very sharply in the ume of tradmg in the low-priced, last year or two and are selling speculatIve issues that hitherto at very high price-to-earnings have done 11 ttl e marketWise. ratios and extremely low yields Strength in thIS type of issue has that are based on possible future been the mIssing mgredlCnt In a earnings and dividends rather complete market cycle. During than, on the ,present. They could such an advance, the higher grade ,be quite vulnerable in the event Issues may do lIttle more than of a change in the high investor churn back and forth and enlarge confidence prevailing today. This their potential tops IS almost the exact reverse of the In all our technical discussion so far, we have considered only the general market and the aver- ages AU of the varied technical approaches of business indicators, bank clearings, breadth-of-themarket .graphs of the averages, both on point and figure charts SItUation in October, 1953 At that time we said, The market is dis- .counting a 15 to 25 drop in earnings We are m a period in ,which investors are placing more stress on What they think IS going to happen than m what is actually happening and on vertical line graphs all On the other hand, there are confirm the fundamental fmdings also quite a few issues today that that the bull market has reached a have been more or less neglected mature stage and may be build- marketwise and are still selling at ing a major distrIbutIonal pattern fairly reasonable price-to-earn- with stocks passing from strong ings ratIOS. Issues of this type hands to weaker, more speCUlative would suffer little marketwise in holders. If thiS turns out to be the event of a general decline and the case, the market will follow might even move agaInst the one of two possible correctionary trend if fundamentals favored patterns before the long-term ad- theIr group. vance is resumed One possible pattern could be a sharp 1946-type Piecemeal Readjustment decline of 25 or so, followed by The broad economic pattern and a re-accumulation are a. T his the more intelligent approach to could carry the industrial average investing that has prevailed 1n back to the 400-360 area some recent years, favors a possible time in 1956 Thc other pOSSIble pIecemeal readjustment over a pattern could be a 1951-1953-type period of a year Or so rather than of consolidation WIth the averages a sharp decline In the 1951-1953 holdmg m a broad trading area market, the averages ranged in a while indiVIdual iss u e san d 15 tradmg area for two years groups adjust piecemeal with while some individual groups some groups declinmg while at were advancing and declining at the same time other issues and the same time, For example, the jrroups are advancing but even- steels reached their highs in Jan- tually the whole market correct- uary 1951 and declined 33. The ing any temporary overvaluations. textiles reached their high In Feb- A study of the graphs of over ruarv 1951 and declined 40. The 1 200 indIvidual Issues suggests distilling – issues reached their that the 1951-1953 pattern is the peak in October, 1951 and declined more probable one. At the pres- over 30; the coppers their hlgh ent moment, many indlvldual is- in January 1952 and declined sues indicate the possibility that 33 , the oils their high In March they are forming dlstrlbutional to July. 1952 and declined 25; tops that may need some more the farm equipment issues their 5 , highs in October, 1952 and de- profIt potentials with the small- clmed over 30. The ralls did not reach then hlgh untIl Jan- est amount of downside risk would include OIls, natural gas, uary, 1953 and declined 20 food chains, automatIOn issues, WhIle all of thIS was happening electromcs, airlines, retail stores other groups were resltng and 'and for a speculatIOn, better- slowly forming reaccumulabon grade Canadian Olls and natural patterns in preparation for the Igas Issues. 1953-1956 rise. Whether the 1956 pattern wlll , There will undoubtedly be some lexcellent buymg opportunities resemble 1946 or 1951-1953 IS not durmg 1956 and it would seem certam. I favor the latter at the 'advisable to use current strength moment and in such an event, 1 I'to elIminate from your list both believe the 1956 range ,will be a lovervalued and marginal Issues 520 high .. and 430-420 low as Iduring periods of strength in Inagainst ,a present 485. the event price level of of a 1946 pat- ljng to buIld up a potential buy- reserve. Undervalued Issues tern, r'believe the range will be Ishould be retamed and added to 500-520 'high and 400-460 low. ;on minor weakness. 1956 should The groups that offer the best ,be a year of extreme selectivity. ,. I I , , i I I, . I 'f' i , I I ! ., I 6 ;' . .. and 1946, a certain amount of caution seems necessary at these advanced levels to offset the possibility of a psychological change in investor feeling. The SItuation is further compli- -On BasIs of\ 10 Yr Av 19M duPont 155 165 General Elec 33 43 General Motors 35 36 Stand. Oil N J. 85 105 Umon Paclfic 128 150 Today 230 54 47 150 180 cated by the fact that the figures U. S. SteeL 39 46 58 Iabove relate to an average of stocks and not to individual is- On the basis of present dIVi- sues. Today's market, lor ex- dends and 10-year average yields ample, is quite different from and 1954 average YIelds, the six 1946 when the advance in the stocks would sell at the foHowing' Iprice level was quite general. High-grade and low-grade, in- -On Basts of10 Yr AV, 1954 Today vestment stocks' and speculative duPont 199 217 230 stocks all participated in the advance. Today's market has been much more selective. The steepest advances have been in the bett.ugrade stocks that have been eligible for institutional investment. General Elec. GSteannedr.alonMNot.oJr.s Union Paclfic U. S. SteeL 43 33 111 140 35 52 54 38 47 117 150 149 180 44 58 Many second-grade and specula- J The results are approximately tive issues have done little marketwise in recent years, and, in the same under both methods with the exception of duPont and Gen- Electric where the dividend many cases, are comparatively payout was a bit above average undervalued in relaUon to some ithis year m relation to earnIngs. of their better regarded neighbors. It might be interesting to note .These figures are not meant to be 'a prediction, but simply Illustrate what might happen if some now, at what price level six better- unknown factor caused a lower- grade issues would sell if, for ling of-not earnings or dIvidends some nOw unknown reason, investor confidence dropped price to 'but simply investor confidence. ISuch a study is subject to the crit\icism that recent developments earnings ratios back to the 10-year Ihave changed the quaJity rating of average ratios or even back to the 'Isome of the compames concerned laverage pIe ratios of only a year ago. Estimated earnings and and that they are entitled to seU, at a higher ratio than in the past ThJs could apply particularly to present dividends for 1955 on U. S. Steel but I have attempted these six issues are Est, Earns duPont 9.15 General Electric 260 ito select six companies that al- Dlv 7.00 ways have had a relatively high tquality rating To extend thIS type, 'of reasoning to justify either a 2.00 relativelY high or low general General Motors 430 2.50 ; ratio smacks somewhat of new Standard Oil N. J. 1050 anion Pacific 1700 U. S. SteeL, 5.80 6.00 8.00 .era thinking. tIfication of iratios would One possible ,justhe present higH be that the long 2.60 undervaluation might be offset by If past average PIE ratios prevailed, the stocks would sell at ,a relativelY long period of over'YauaUon particularly in a period I when earnings and dividends are the following prices on present advancing. earnings as compared with pres- On the basis of the Central ent price. Value or normal value theory of

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Tabell’s Market Letter – January 20, 1956

Tabell’s Market Letter – January 20, 1956

Tabell's Market Letter - January 20, 1956
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if.. ..; r Following al'e the. s'cocks used in the compilation of gX'oups as outlined in Blue msX'ket letter of January 20,1956 20 GROWTH ISSUES Aluminium,Ltd. Amerada Carrier Corning Glass Dow Chemical DuPont El Paso Natl 0as (ioodrieh rntet' .Bus .r1ach. Minn.Honeywell I'linn. ltIonsanto National Lead Owens COtning Pfizer' Radio Cotp. Rohm & Haas Soott PapeX' Shell Qil Union Carb!.de 20 XSSUES Amei'ican Can . Amer. Cyanamid DuPont ileneral Electric General Foods General Notors !ulf' Oil Johns Manville Kenneoott National Dairy Penney, J.C. Phillips Pete Sears Roebuck Socony Oil Stand Oil of Calif. Stand.Oil of Ind, Stand.Oil of N.J. Texas Company U'nj.on CaX'bide \'1estinghouse Elec. 20 MEDIm1GJW)E ISSliES Allied Stores Allis Chalmers Babcock & Wilcox Blaw-Knox Bucyrus Burroughs Chain Belt Clevil;e CoXP. Crane Co. Distillers Co)'p. Elliott Co. Joy Mfg. l-owens'!;ein Mead National Gypsum NX. Ai1' Era\ce Cement Rheem Mfg. Sylvania Elec. Yale /) TOI-me 20 ISSUES Amer. Airlinea Armour Aveo BaIt /) Ohic Canada Dry , Columbia Gas Emerson Radio Gimoel Int. Te. & Tel fn..ack N.X. Central. Pan All1el'.vI. Air Penn R. R. Pepsi-Cola Raytheon Hezall Drug Servel Spiegel Edmund W. Tabell .

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Tabell’s Market Letter – January 20, 1956

Tabell’s Market Letter – January 20, 1956

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, Walst2!l &.Cff.1 MEMBERS NEW YORK STOCI( EXCHANGE AND l,!OfNr NEW YORK PHILADELPHIA ANG!..is/ 5,)51 IYOFFICES CO!ST TO Ct.NECTEC tJY()\ \L .. ,TABELL'S MARKET LETTER COMMODITY EXCHANGES LUGANO (Swa,ldl .. January 20,1956 The Bow-Jones industrials made a decisive dovmside penetration of the thirty-eight day trading range between 490 and 477 and reached an intra-day low of 463.16 on Friday. hS mentioned in previous letters, this downside penetration indicates at least, a return to the lower part of the broad 490-433 range in which the market has held since June. The top pattern formed since November appears to indicate that the downside objective is around 445. The price action of individual groups has been quite diverse. Possibly the oils and natural gas issues have shown the best action. The action of the steels has been on the unfavorable side. If the aver- age reaches somewhere around 445, would add to holdings in my recommended list last published in the December 2nd letter. A year ago this letter made a compilation which aroused a good deal of interest. The introduction to this compilation read as follows Few people realize how diverse the action of the market has been over recent years. Regardless of the fact that the Dow-Jones industrial- average has advanced for over five years with just a few minor tions, the action of various types of securities has been quite differ- ent. Many holders show losses on individual securities despite the fact that the general market has been in a broad advance since 1949. As al- vlays, it has been dangerous to buy the wrong securities at the wrong time. In the main, it has definitely paid to own quality issues over recent years. The following compilation may be of interest. It presupposes an investment of 100,000 in four different groups of stocks at the 1946 highs. The first group is composed of twenty growth issues and pre- supposes an investment of 5,000 each in such growth companies as Dow Chemical,-Corning etc. The second groupis composed of twenty stocks of investment quality. It was selected from the twenty favored issues of 130 Common Trust Funds of leading trust companies. It includes such issues as General Motors, Standard Oil of New Jersey, General Electric, National Dairy, -Sears Roebuck, etc. The third group consists of good quality dividend-paying issues a bit below the in- vestment quality of the second group. It consists of issues like hllied Stores, hllis Chalmers, Babcock & Wilcox, National Gypsum, Sylvania,etc. The fourth group consists of lower-priced, more speculative issues. It comprises the twenty most actively traded issues in 1953 selling at around 20 or lower. It includes the issues in which the general public usually trades. It consists of issues like Armour, Avco, International Telephone, New York Central, Pennsylvania, Pepsi-Cola, etc. The figures in the above mentioned compilation have been brought up to date and the results are tabulated,below. Here is how the purchase of 100,000 at the 1946 highs of each of these groups would have looked at December 31, 1955. The table also shows the action of each group during the year 1955 alone Growth I-SSUB-S . Investment Issues Med-um-Grade Issues Low-Priced Issues 1946 High 100,000 100,000 100,000 Dec.'31,1955 272,573. 165,43l. 88,549. Plus Rise 1954-55 . 26 – — – 22 21 16 The most interesting thing to note about the above table is that the purchaser of low-priced speculative stocks at 1946 highs still has a loss nine years later. It is further interesting to note that the relative action of the-four grnups, with the growth issues showing the best action and the low-priced issues showing the least favorable action, continued during the year 1955 just as it had during the eight years previous. market letter not. and under no III to be conatruf!(i u. aD ot'fe!' to aceU or a KlhcltatlOn to buy any aeeurnte!!l reterred to herein The Informatlor. contained bereln not LI to ac,-uracy or and the th('reof is not, and under no IS tn beeonlltrued 8.9, a representatIOn l b1 & f;o, Ine All hn.ve an Intf're'lt In the or OpinIOn are subject to ehanKe- WIthout notlee-. Wabton II Co.., Ine, or any Officer. Dlreetor or Stockholder tbereof may mentlonetl heTeln. Thill. market letter ill Intol!nded and presented merely a geneTal, mformal commentary on day to day market and nt a analY1HS Adrl.lt.lOnal Information 'lt1; bot furnished upon WN lOt -I ., -2- The obvious conclusion to be drawn from the above is the terrific advantage involved, especially for the younger man who is not concerned with current income, in the purchase of growth stocks. It will be seen that even though purchases were made at previous bull market highs that in a period of less than ten years the growth stock investment has appreciated almost four times. It is also interesting to note that although the growth investment yielded only at the time of purchase, the current yield on . the original investment is better than 8. A tabulation of the earnings and dividends behind each of the above theoretical groups is also very instructive EARNINGS 1946 High 1955 –Plus Rise Plus R!.,se 194655 Growth Issues Investment Issues MedTum-Grade Issues Low-Priced Issues 5,998 6,482 7,724 5,530 18,177 18,783 15,619 9,451 203 174 102 71 27 12 25 106 DIVIDENDS Growth Issues Investment Issues Medum-Grade Issues Low-Priced Issues 2,503 3,520 3,080 1,543 8,707 9,676 6,908 4,996 248 175 121 223 11 10 8 122 It will be noted that, the rise of the Growth, Investment and Medium quality groups has been sparked during the first-eight years of the market cycle by increasing earnings and dividends — a factor which, until this year, had been strikingly absent in the case of most lowpriced stocks. A look at the, figures showing the percentage rise during the-year 1955, however, shows that both earnings and dividends for the low-priced group have doubled with very little corresponding market action. Various conclusions may be drawn fac t,'-It ispossible- on one hand to that the current bull market cycle will not be com- plete until low-priced issues move ahead beyond all reasonable value with an accompanying flurry of public participation in the market. It- is also possible to conclude, however, that the current market is per- haps a more intelligent one and the investor in 1955 is eying askance the earnings and dividends of companies which can improve profits only during a terrific business boom. The above is also borne out by a look at the yields and piE ratios of the four groups mentioned YIELD 194b 1949 1955 PiE RATIO 194b 1949 1955 Growth Issues Investment Issues Medrum-Grade Issues Low-Priced Issues 25 3.5 3.1 1.5 4.5 2.2 7.3 35 9.0 4.2 4.2 5.6 16.5 15.4 12.9 18.0 10.2 7.1 5.3 9.4 21.8 14.5 10.6 9.4 It will currently be seen that while the growth and investment issues-are close to their 1946 highs on both a yield and FIE basis, the medium-grade issues still have some room for appreciation and the low- – —psricaetd itis'ssuheosuldhabvee' attracted practically no public demand. – This perhaps On the basis of the above figures, it can be seen that the Growth and Investment issues are quite adequately priced at present and it may be even concluded that some are due for a fairly sharp correction. It can also be seen, however, on any weakness profit may become available in the Medium-Grade or even in some of the better Low-Priced issues. EDMUND Vl.TABELL (N'cJQ VlALSTON & CO.INC. r.S. The names of the individual issues in the four groups mentioned above will be furnished upon request.

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Tabell’s Market Letter – January 27, 1956

Tabell’s Market Letter – January 27, 1956

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Tabell's Market Letter - January 27, 1956 page 2
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– – — Wdlston &- Co. – – – – – I n c – – MEMBUS NEW YORI( SroCK EXCHANGE AND OTHER lEADING STOCI( AND COMMODITY EXCHANGS NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,I,Id) I ' OFFICES COAST TO COAST o.;OlNECTEC BY DIRECT PRIVATe WIRE SYSTEM / ' TAB Ell'S MARKET LEnER , January 27, 1956 Market action continues nervous and uncertain with volume remain- ing small. So far nothing in the technical pattern has occurred to change the thought that the downside penetration of the two-month trading area between 490 and 477 in the Dow-Jones industrials indicates at least an intermediate term decline to the 445-435 range. After reaching a low average staged a two-day rally the first overhead supply leveL The subsequentdecHne- readhed an intra-diii low of 463.33 on Friday. It appears that the market is now'undergoing a test of the 458.21 low of Monday. h downside penetration would pre- sumably indicate at ,least a decline to the 445-435 level. tbility to hold around the 458 intra-day low would be constructive for the shorter term and indicate a possible rally to 477-482 where there is very heavy overhead supply that will be extremely difficult to penetrate. The market, as measured by the Dow-Jones industrial average, has held in a range between the 490 high reached in September before the announcement of President Eisenhowerls illness, and tested again on several occasions, and the October low of 433. A downside penetration of this six-month trading area would indicate a downtrend but the objective would not be certain. There is support at 420 and again at 410 and again at 385. I doubt very much if the industrial average would decline below 385. This was the 1955 low reached about ten months ago. of the above is of only academic interest to the long term investor. The favorable fundamental factors that have been with us since the start of the 1949 rise are still with us and regardless cf temporary -tooc.orrections, issues may have -moved-ifiead tQ\'rd higher levels. Some- , rapidly an'd maybe in -need ofcOi1SOli– – -,-,- dation and temporary correction. I expect an upside market for most of 1956. I do not expect the industrial average to move above 1955 high of 490 or below the 1955 low of 385. This does not apply individual issues and groups. 1956 may be quite similar to the 1951-1953 period when some groups were declining while others were advancing and-still others were in consolidation phases. Eventually, in a piece-meal fashion, the,entire market consolidated the rise from 160 to 295 in the industrial average and was ready to move ahead again. I believe we are going through the same price action today with some groups in downtrends and others in uptrends and still others consolidating regardless of the movement of the averages. Under these circumstances, it would appear that in capital appre- ciation accounts it still seems advisable to have a portion of funds in reserve in the hope of purchasing selected issues during periods of pos sib Ie vleakness. However, with the longer term trend favorable and with continued selective price action in prospect, commitments in situa- tions that still appear undervalued should be held ,and added to on minor pr.ice …weakness. '- I believe the issues in our recommended list, which is reviewed on the following page, fall into this category and would confine present commitments to situations of this type. From a technical Viewpoint, the downside risk appears small in comparison with the passible appreciation Most of these issues have been reviewed in recent Blue Letters. rnark(!t letter not, and under no Clrcum,;tanCi!II no to be eOfUltrued 1.1, an oftet' to MU or .. 8Ohcltatlon to buy any MCuntus referred Ul The InformatIOn contained bereln I' not lIuarant.eerl as to or and the f'urn1l!hlng thereof d not, and under nf) C11'euml!otanee5 lSI to 8. re'Presentatlon by Wal…t.Jn & ('0 Ine Ail exprSiOnl!o of O'Plnl0n are to ehanKe WIthout notlee. Wa1.lton A Co.., Inc, or any Offleer, DlfIeetctr or Stockbolder thereof, may h.1ve an 111 the ,ecUfltle! mentIOned I'lerelll This leta!,)J ltlwndl and merely a Informal commentary on day to day market news and nt 11. analYSl9. Adiluonal informatJQn WlUl restleCt to aDlT Ie!untlell referre-d to — h-e–rein -W- l\l be furnlahed upon request. WN 3Ul -.- . ,,' , . . — -2- Present Price Price Recom. Yield Alleghany Corp. Allegheny Ludlum 8 31 Allied Stores 52 American Can 44 American Chain 39 J.mer. Potash B 96 kssoc. Dry Goods 32 Barber Oil 63 -Bltlck & -Decker —,- – — 35- Calgary & Edmonton 21 Celanese 19 Chain Belt Cities Service 58 57 Coca-CoLa 125 Colgate-Palm. 60 Dubilier 35 Cutler-Hammer 77 Dow Chemical 58 Dresser Ind. 51 Eagle Picher 39 Gen'l RvJY. Signal 66 Hall Printing 21 Hewitt-Robins 39 Joy Mfg. 36 Magma Copper 109 Monsanto Chemical 43 Mont.Dakota Util. 26 Pacific Petrol. 13 Pan Amer.-iJorld !- 17 3 16-15 38 4630-33 40 26 59 – 19– — 1631–37 30-35 38 122 6021-22 5738-40 33 22 59 – 23 75 31 26 11 11-13 Objective 12-17. Support at-7. 4.8 Objective 75. Support at 28-26. 5.8 Hold for income. 4.5 Object.60-65. Support at 40-38. 6.4 Hold for income. 2.6 Object.120-150.Support at 95-85. 5.4 Hold for income. 4.0 Object. 80-115. Support-at 50-48. 2.9 – –Object .-68 .Support at32'-SO. 0.5 Buy for long term speculation. 2.6 Hold for long term specutation. 5.2 Object.78. Support at 4.2 Object. 81. Support at 52-50. 4.0 Object. 200. Support at 125-115. 5.0 Object. 100. Support at 56-54. 6.8 Object. 547 Support at 32-30. 4.7 Object.120-140. Support at 65.1.7 Hold for growth. Support ftt 52-50. 5.0 Object. 857 Support at 4.6 Object. 61-r7. Support at 36-35. 4.5 Obj ect. 140-150. Support at 65-62. 6.7 Hold for income. 5.1 Object. 85. Support at 37-35. 5.1 Object. 75. Support at 35-32. Object. 200. Support at 90. 2.3 Hold for growth. Support at 42-40. 3.7 Object.45-60.Support at 25-24. Buy as long term speculation. 4.7 Object.27-45.Support at 16. Sinclair Oil United Fruit Western Auto Yale & Towne – …. – 57 46 5.4 52 47-50 5.8 35 25 4.6 67 45 4.5 43'40 — Object.65-89.Support at 53-50. Hold for income. Hold for income. Object.105.Support at 60-58. In addition to the issues listed above I would add the following issues to the recommended list if the buying levelS mentioned below are reached Stock Jan.27th Close Buying Level ,Blaw-Knox ,Butler Bros. Chicago Corp. Emerson Electric ,r.od Machinery International Nickel Kennecott Copper – Masonite Pittston Co. – 28 1/2 28 1/4 24 7/8 31 53 1/2 79 7/8 116 1/4 35 l/ 39 1/8 27 51-49 70-65 105-100 34-32 34-32 — -.— These issues have not been reviewed, but they will be if buying levels are reached. EDMUND W. TABELL WLSTON & CO. INC. – – – – – – – – – – – – – – – – – – – – – – – – – – – – – ..0

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Tabell’s Market Letter – February 03, 1956

Tabell’s Market Letter – February 03, 1956

Tabell's Market Letter - February 03, 1956
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Walston &- Co. – – – – – – – – I n c – – – – MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND' COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO ISw,…,Id I ayOFFICES COAST TO COAST CONNECTfC DIRECT PRIVATE WIRE SYSTEM TAB Ell'S MARKET lEnER F'ebruary 3, 1956 — The market, as measured by the Dow-Jones industrial average, success- fully met the testing of the January 20th low of 458.21 and, with leader- ship of oil and gas issues, moved forward to retrace more than half of the thirty-two point loss suffered since the turn of the year. At Friday'S high of 479.10,however, the industrial average was approaching the 477-482 range mentioned in last week's letter as an area in which there is very heavy overhead supply that will be extremely difficult to penetrate. All of this, of course, applies to the averages rather than indiVidual issues. For example, the purchaser of General Motors at 54 in mid-November has a ten-point loss the purchaser of Socony Mobil Oil at 58–on- -the ,same date pr-ofit.I expect-this diverse action in individual securities and groups to continue for a long time. It is reported from various sources that DRESSER INDUSTRIES (53) will report approximately 1.50 for the quarter ended January 31, 1956, normally the poorest quarter of the year. This would indicate that Dresser's 1956 earnings will substantially better the 5.15 reported for 1955. Passage of the natural gas Bill will be favorable to Dresser since-it services the oil and gas industry. Currently, economists are forecasting a record rate of growth for this portion of the economy. Indeed, arecent report issued by the Chase-Manhattan Bank estimates the expenditures required to maintain and ,expand this economic sector will run in the neighborhood of 115 billion expressed in 1955 dollars, or nearly twice the annual budget of the United States. JOY MANUFhCTURING (36), long one of the favorites of this letter, released an extremely gratifying report for the December 31 quarter.Sales were up 59 with margins widened to 18.4 from 12.7. Per share earnings were 1.27 indicating the strong possibility of 5.00, or better, earnings on the 'new stock for 1956. Since the current dividend rate is only 1.85, it would appear that some liberalization could be looked for. However, even at the current rate, the yield is still better than 5. AMERIChN POTJ,SH & -CHEMICAL B (1.02), has e intention to split its stock 2 1/2 for 1, subject to stockholder approval. At the same time the Board expressed its intention of placing the split shares on a quarter dividend basis of equal to the current on the old stock. Earnings were estimated at 4 million or 6.04 a share on the currently outstanding 60 increase over 1954 . ATLANTIC REFINING (38 has listed details of a plan by which it in- tends to acquire the petroleum properties of Houston Oil Company. Refining will buy the properties for cash, subject to an oil and cash pay- ment. This will be an economic interest in oil and gas reserves to be satisfied over a period of years by proceeds from sale of a portion of the oil and gas produced during the period. Financing of this payment will be arranged through banks and insurance companies. At present prices and projected rates of production, the payment will require about ten years, during which time Atlantic Refining will receive sufficient income from the Houston Oil properties to operate them on a breakeven basis. Should crude oil prices rise during that time, the payment period would be less. At the end of the payment period all of the properties will belong to Atlantic Refining for its remaining life. The net effect of the acquisition is that Atlantic Refining will acquire in ten years terrifically valuable oil properties at no actual cost. — – (.63-) 'repoit'ted-rec-ord.'sal-es-and-eat'nings-for 1955 with the 8.25 per share net far ahead of the 2.30 reported in the previous year. Mr. E.J. Hanley,president,reported SUbstantial backlog, stating that a major factor in the improved results was the company's ex- tensive expansion and modernization program on which more than 100 million had been spent in the past ten years. WESTERN AUTO SUPPLY (35) has recently run up sharply on an offer by Denman Enterprises, Ltd. to buy 300,000 shares at a price of 38. a share. This offer expires at the close of business February lOth. The stock originally entered our recommended list at 25. EDMUND IV. TABELL – \vALSTON & CO.INC. – . ERRf,TA In the January 27th issue – Paragra)h' 3 sixth line shouln T'P',n – market It!tteeKKoltOO1 un4irno orI contained her;;'n niX guarl1.nteei J,. to aeeuracy an-4!/iti' ttlTlktlrra 'tnereoru not;and ay leeurlties referred to herein. The mforma.tlolt 19 to Mcon9trueQ as, a representation l by – Co. Inc. All of oplnlon are luhjed. to Wltlwut notlO!'e Wabton. Co.. Ine.. or atl.y Officer, Dlreetor or thereof. may an Int.lreot In 9e1!ut'ltloes mentioned and not a complete- aoalyll.'1 Ad.htJOnal – — .ThlS markg gter b Intended and presented merely II.! a R'eneral, mform.al eommentary on day to day market .Ith — to any III!CUllties to herem W-lJl be furn-l.!lhed–u-pon request. N 31)1 -.I i .- ,J

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Tabell’s Market Letter – February 10, 1956

Tabell’s Market Letter – February 10, 1956

Tabell's Market Letter - February 10, 1956
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Walston &- Co. —–Inc – – – – MEMBERS NEw fORI( STOCK EXCHANGE AND OTHER LEADING STOCK AND' COMMODITY eXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO Sw;t,,,I,,dl OFFICES COAST TO COAST CONNECTfC BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER February 10, 1956 The lack of volume on both the advance of a week ago and the decline of the past week continues to indicate the absence of a general trend. This is by no means a new development. Ever since the early months of 1955, volume on either the upside or downside has failed to move much above ten-million- share mark in anyone week. This wa s even true of the vleek of the Eisenhower break when downside volume totaled 12,420,000 shares and upside volume 9,280,000 shares. At no time during the six weeks on which the Dow-Jones industrial approached or touched the 490 level did the upside volume even reach the eleven-million-share mark. Total volume has fallen off sharply since January,1955, despite the fact that advahc8a Tram- 400 to 490. -Tfie- ten-week moving ume has dropped from a high of almost 180 million shares reached in February 1955 to roughly 110,000,000 shares at last weekend. This drop in volume has been almost entirely due to a decline in upside volume which has declined from a ten-week moving total high of 115,000,000 shares to last week's ten- week moving total of roughly 60,000,000 shares. This has happened during a period in which the averages were mainly in an advancing trend and implies a definite loss of upside momentum. On the negatively favorable side, down- side volume has failed to increase. From an early 1955 high of 63,000,000 shares the ten-week moving total of downside volume has dropped to 50,000,00 shares at last weekend. It appears that while the investor has been less willing to buy, there is no increase in liquidating pressure. This has,re- suIted in an extremely selective market as is evidenced by the fact that since May, 1955 there have been just as many declining stocks as advancing stocks despite the fact that the averages 'have advanced in twenty-five weeks and declined only in thirteen weeks. Part of the uncertainty has been caused by President Eisenhower's ill- ness but, in my opinion, a great many issues were somewhat overpriced even before the President's illness was even thought of. That is why this since July, has been advising lightening holdings in overvalued and over- exploited iss.Le on whJl.esj;ill posj,tion in the relatively undervalued issues-in our recommended' list This advice – continues. If, as most predictions indicate, 1956 earnings will be about the same or slightly better than 1955, the only thing that apparently make the average move above the 490 high would be an announcement that President Eisenhower will seek re-election. In that event, it is possible' that the average might reach the 520-530 level. On present indicated earn- ings, the market would be more than amply valued at that level and I would advise selling on to cut invested pOSitions to 50 in capital ap- preciation accounts. If, on the other hand, President Eisenhower decides not to seek re-election and the market declines, I would buy on weakness into the 430-400 area and again become 100 invested as the market (and especially selected issues) would then be fairly valued or undervalued on present earnings and dividends. Two articles in the February issue of Modern Railroads Magazine contain some very interesting notes on Centralized Traffic Control, or CTC,systems, which are among the major products of GENERAL RAILWAY SIGNAL (63 1/2). One article, which concerns New York Central, describes some of the tremendous savings this road is effecting through the installation of CTC eqUipment. CTC is an electronic signal system by which train movements are centrally controlled enabling one track to do close to the equivalent of two. Trains I- are speeded up, operating cut, and taxes ar.e.saved. So far one of the largest CTC installations has been on the Central's Erie division.Currently, two of the four tracks on this division are being largely torn up.The new line will be two-directional on all tracks and CTC- vlill permit freight trains to travel at 60 MPH as compared with 30 MPH pre- sently.The article quotes Alfred E.Perlman,Central president,as estimating that of the cost of Erie division CTC will be returned each year in various savings. The other article features an aerial photo of Southern Pacific's Engle- wood-yard at Houston that is to be dedicated on February 15th. This huge push-button type classification yard saves more than two hours of switching time on each train passing through Houston. The yard features push-button route selection, radar-type speed control and automatic switching of Jeneral Raiiwav' Sifma.l Co' rj,,, i pn market letter,,, not and unner no II to be con.trued … aD offer to &eJl or a I ferred to herein The Information contalrlf1 bereln ,,, not by WaltJn Co ALI a9 to accurary ar of Opinion are and the furnbhmg thereof 1S ltrMibe a to ehanlfe WIthout notue Wabton C&. triC. 'lS'r''1lnt''O!tt'ett'. toe e have an lnt;re-ot In thor 3ecuntleS mentioned herem Tha markltt letter 111 Intended and presented merely u a !tenHal, mformal on clay tJ) day new and n.)t a tomplete analYSIS Additional Inform.atJon With respeet. to any .untles referred to herem W'IIl hoe upon request. I ,, – J

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Tabell’s Market Letter – February 15, 1956

Tabell’s Market Letter – February 15, 1956

Tabell's Market Letter - February 15, 1956
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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,j,ld I OFFICES COAST TO COAST CONNECTEC BY DIRECT PRIVATE WIRE SYSTEM EDMUND W. TABELL INSTITUTIONAL LETTER Rebruary 15,1956 Since July, 1955, the stock market, as measured by the Dow-Jones average, has held in an area bounded by 490 and 433. From my technical work it now appears probable that the market may hold within this range, or a slight ly wider range for a considerable period of time — possibly for a year or so more in addition to the eight months already spent in the area. It is entirely possible that this area may be temporarily widened for a short time. For instance, an announcement that President Eisenhower will seek re-electio might rally the market to a new high, but I doubt if the industrial average would move ar.y higher than 510-530 area. This sounds like a lot in points, but is only about 5 above the 490 high. Conversely, the market might decline temporarily to the 420-400 level. That again is not much more than 5 below the October low. During this lengthy consolidating period, individual groups and issues might undergo piecemeal readjustment with one portion of the market advanCing at the same time that another portion is declining. This possible action would closely resemble the 1951-1953 market. The broad economic pattern and the more intelligent approach to invest ing that has prevailed in recent years, favors a possible piecemeal readjustment over a period of a year or so rather than a sharp decline. In the 1951-1953 market, the averages ranged in a 15 trading area for two years while some individual groups were advancing and declining at the same time. For example, the steels reached their high in February 1951 and declined 33. The textiles reached their high in February 1951 and declined 40. The distilling issues reached their peak in October, 1951 and declined over 30; the coppers their high in January 1952 and declined 33; the oils their high in March to July, 1952 and declined 25; the farm equipment issues their highs in October, 1952 and declined over 30. The rails did not reach their high until January, 1953 and declined 20. While all of this was happening other groups were resting and slowly forming reaccumulation patterns in preparation for the 1953-1956 rise. During such a period, the action of individual issues and groups will be of much more irrportance than the action of any average. While recently the averages were only 5 below the high, there are a large number of individual issues of good quality that have suffered declines of 15 to 20. At the moment, there are only three groups that are in a definite downtrend. They are Automobiles, Automotive Equipment and Motion Fictures. In addition, Steels, Building Supplies and Finance issues are showing below average action. Other groups with potentially vulnerable patterns include Aluminum, Business Machines and Rails. On the favorable side are Air Conditioning, Machinery (especially Automation issues), Drugs, Oils and Natural Gas issues. A Presidential veto of the controversial gas bill might temporarily delay any upswing in the last two groups. In addition, there are a large number of groups that are currently classified as neutral but have good longer term potentials such as Chemicals, Paper, utilities, Retail Stores, etc. Edmund 111. Tabell Walston & Co.Inc. imemorandum not to be tonilrued as offer or sohtltahon of a'Hen to buy or sell any lec.untles From time to tIme Wlslon & Co or, any partr'ler I may have an interest 11'1 some or Clii of the u!(unt,es mentioned here.n The foregOing m,,!eTldl has been prepared bv III as a mlIer 0 In ormatton on y II baled IIPon information believed rehable but not necessarily complete, IS lIot guarlilnteed U aCCufate Of finl, and Ii not ,ntended to foreclole Independent 'qUlfY —–..

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Tabell’s Market Letter – February 17, 1956

Tabell’s Market Letter – February 17, 1956

Tabell's Market Letter - February 17, 1956
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1r. W—a-lstnonc.&–C-o-. twlEMBERS NEw tORK STOCK EXCHANGE AND OTHER LEADING STOCK AND' COMMODITY' EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO Sw,ed I OFFICES COAST TO COAST COt.4NECTEC BY DIR.ECT PRI …. ATE WIRE SYSTEM TABELL'S MARKET LEnER February 17, 1956 PAN-AMERICAN WORLD AIRv!AY3 Statistics One of the most disappointing of this Current Price 18 letter's recommendations has been Pan- Dividend 801 World Airways which has held in Current Yield 4.5 the 16-22 range for a period of 15 months. Long Terill Debt. 49,325,000. Common Stock 6,091,822 shs. Part of the reason for this poor action may be found in the poor performance of the airline group. Hew relative strength Net Fer Sh-1955 1.75- E of the entire airline group seems to be i Net Per Sh-1954 1.71 proving and their current fundamental Gross Rev.1955 245,000,000-E Gross Rev 218,9,2.0,000 ness would seem to justify contention tha the air carriers are close to their lows. It is also possible to point out that PN Mkt.Range-1956-55 22 – 16 5/8 now deserves a considerably better invest ment standing within the airline group was formerly the case. The company was strongly dependent on a U.S.Governme subsidy for profitable operations.This subsidy is now a negligible factor. This and other basic improvements would seem to make PN currently equally a attractive, if not more attractive, than the domestic trunk airlines. Perhaps the most important recent development in the improved outlook fo PN is the Dec.1955 decision setting a permanent subsidy rate of 9,( million.This is based on a 14 million service mail pay rate and will be re duced by any excess of mail pay over this figure and by capital gains on saLE of equipment.Since this is a permanent rate,there will be no recovery of pr vious years' subsidies, thus enabling PN to be positive what income its oper tions have produced during a given year. Furthermore,with a strong growth trend in gross revenues, PN will make a profit entirely exclusive of subsid During previous years, growing revenues caused the C.A.B. to reduce subsidy so that little change in actual per share net was shown. With the subsidy now negligible, increase in revenues will go down directly to per share earnings. On this baSiS, taking the most reliable estimates of growth in air traffic, PN can be expected to earn close to 2.50 per share in 1956 and better than 3.00 for 1957.Since the stock is now selling at than ten times current earnings and six times projected earnings two years hence PN's growth potential would seem to be available at an unusually low price. vlorthy of note is the fact that by 1960 PN will have the most modern airlin fleet in the entire world. AS the first airline to order jets, it will get first delivery, thus giving it substantial advantage over its competitors. Although no estimate can be made of jet cost,it seems rogical to expect tha they can be used to their greatest advantage over long-haul overseas runs.I must therefore be further assumed that the jet age will have a more favor- able impact on PN than it will on the domestic trunks. Worry has been expressed by some analysts as to the possible dilution of equity in order to finance jet purchases. While 269 million, the cost of P 's new jets, seems a large amount to spend, spreading this amount over five year of large cash flow earnings makes it loom a little less ominously. With the earnings projected above, it seems probable that PN will require no new equity financing in order to complete its jet fleet. Another advantage which F'N holds over the domestic airlines is lack of competition from other forms of travel – notably the automobile. There is a large school of thought which believes that each time overseas fares can be lowered a huge new segment of the population can be tempted to venture overseas. Increasingly favorable operating costs, plus possible economies to be realized from jets,seem to make such a future projection a possibilit It can thus be seen that the future growth rate for PN may well be substan- tially steeper than that which we anticipate. Technically,the Ions term projection of our graphs continues to indicate a possible 45. With a 3.00-3.50 earnings level foreseen for 1957 and with further growth in prospect as jets come into the picture, this projected price would require a F/E ratio of 15 or less. 1-.S the improved growth stand ing of PN (and the airline industry)becomes more obvious, such a ratio would not appear to be unduly optimistic.On this baSiS, we continue to recommend PN for substantial capital appreciation over the next few years. EDMUND H.TABELL Th ,k,ma letter I! not. and under no toIbe d th. .,fan h to tehelI ortiaSIMn )ht clatna W o.contained herein Ii! not Iuaranteed aJ! to accuracy or CI'Hl1P et.ene!la an e. o.b'nl.!l InS!' e I C uIn etr…rno r acinryc uOmH! ut'ne1ree'!DIISTect.o1ereo1rn ,h.ue-In Stockho l dTIeIhI rreetphInreefroseeromnf'.a.rltinlooann,. by W.IItn &; ('0 Inr All eXprltll810n!l or opmton aTe aubJltitkto mer'i;, commentary fln rlay to day market have an Intere..t an the mentIoned hereIn Thm mar et. etter II. II. an presen., …. to herem an\J br UP'Qn WN 3'H and nt a .. a complete analY9I!l AddltUlnal mformauon. WIth respect. to any leeuntl(!S re errou '. '\ ,

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Tabell’s Market Letter – February 24, 1956

Tabell’s Market Letter – February 24, 1956

Tabell's Market Letter - February 24, 1956
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., Wdlston &- CO. —-Inc —- MEMBERS NEW ,ORK STOCK EXCHANGE AND OTHER LEADING STOCK AND' COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO Sw,'wl..d) OFFICES COAST TO COAST CONNECTfC BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER February 24, 1956 The Dow-Jones industrials are again attempting to push through the 490 !resistance level that halted-the advance in September and again in November December. Friday's intra-day high of 487.30 compares with 489.94 in 490.75 in November, 490.56 in December and 490.92 in early January it can readily be seen that the 490 level is one of heavy supply. If Mr. Eisenhower announces his decision to seek re-election in 1956, it probable that the market will reach new high territory. It appears that tre is slowly forming the pattern outlined in my Commercial & Financial article of December 29th,-1955-;-At -in;i!ttstrial,average –, f'ias around the 490 level and I said – The present pattern has the appearancE pf a diamond or expanding top. Formations of this type usually consist of five phases. Four have already been completed.The present advancing phase may be phe final step. The first phase was the advance to the July top at The second phase was the decline to the August low of 445. The third an advance to the September high of 490, above the July high. The fourth phase was the October decline to 433, a decline below the previous low of and the first time since the advance started in October, 1953 that a previous low had been penetrated. The fifth phase is the present advance fro, October low If the pattern of expanding highs and lows contin es, market should reach new high territory on the present move and touch the rptrend line connecting the 470 and 490 highs of July and September. This up line now stands at about 508 but will reach 510 by the year-end and ab f20 by early February. The uptrend line mentioned above will be around the 525-530 range for pext ten days. It is probable that any advance sparked by Mr. Eisenhower's to seek re-election will halt at about that level and the high reac – ed at that time will be the high for quite a long period. It will most likel pe followed by a long phase of consolidation similar to the 1951-1953 market In 1951-1953, the industrial average held in a 15 trading range while some – 'lndiv1dual't'13su–e'if and- groups'were advan-clng at''''tl1e' others wer I would expect that the averages for the next six months or a yea hold in an area bounded roughly by 530 and 440 with individual issues showing extremely diverse action. In the event of Mr. Eisenhower's decision not to run, which now seems I would expect a somewhat lower trading range of possibly 490 allJ 400 with the same diverse action of individual issues. In either event, the lengthy consolidation period will be followed by a resumption of the advance into the 1960s with an objective of at least 750 in the industrial average. All of this boils down to the thought that for the next six months to a year, the action of individual issues will be of much more importance than the action of the averages. At the moment,there is no set general technical rattern as far as individual issues are concerned.Some look higher, some 100 lower and a great many appear to indicate that they will do little or nothin for the foreseeable future. I have tried to include the better acting issues from a technical view roint in our recommended list. Some of these have acted much better than the averages. While the industrial average is still trying to better the Septem- high of 490, the following issues have done much better- Recent Allegheny Ludlum American Potash Calgary & Edmonton Chain Belt Cutler Hammer Dresser General Rwy Signal Joy Mfg. Magma Copper 30 1/4 101 1/2 18 7/8 55 1/4 79 48 3/4 62 3/4 31 1/4 122 – 34 111 1/2 24 1/4 62 86 1/2 59 79 39 7/8 129 1/4 Despite their advance,all of these issues still indicate higher levels Other issues in our recommended list have not done as well as those listed above, but they also indicate higher levels over the longer term. Pan-Americ Airways, reviewed in last week's letter, is a case in pOint. Thill mllrket Jett.n l.! not, and under no 1'8 to be con.trued aa, an ofter to seU or a NWI but any to The InformatIOn eonu,II'I('oj by he&reirno.. not guaral'lteei as to accuracy or cf')fn.pletenea and the farn1ShJng thereof Inl'. All exprntllonll of OpiniOn are subJeCt to chanee Wlthout notice. IS no cfrcum.ftlt'n'd!!I1li17l be con'ltruerl II. representation tly or Stnckhnlder thereof. may … ve an ll'ltore-t In the mentIoned hereIn ThIB market letter IS intended and mere'rY a general. lrltohfi'i.i'Cbrrl'mentary on dllY to day nd nlt a complete Addlbonal InforrnaboD …IUI respect to any Buntle!l referred to hereIn W111 br furnlllbed upon reQuest. v.s 301

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