Viewing Month: February 1956

Tabell’s Market Letter – February 03, 1956

Tabell’s Market Letter – February 03, 1956

Tabell's Market Letter - February 03, 1956
View Text Version (OCR)

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

Download PDF

Tabell’s Market Letter – February 10, 1956

Tabell’s Market Letter – February 10, 1956

Tabell's Market Letter - February 10, 1956
View Text Version (OCR)

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

Download PDF

Tabell’s Market Letter – February 15, 1956

Tabell’s Market Letter – February 15, 1956

Tabell's Market Letter - February 15, 1956
View Text Version (OCR)

'. 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 —–..

Download PDF

Tabell’s Market Letter – February 17, 1956

Tabell’s Market Letter – February 17, 1956

Tabell's Market Letter - February 17, 1956
View Text Version (OCR)

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 '. '\ ,

Download PDF

Tabell’s Market Letter – February 24, 1956

Tabell’s Market Letter – February 24, 1956

Tabell's Market Letter - February 24, 1956
View Text Version (OCR)

., 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

Download PDF