Viewing Month: May 1956

Tabell’s Market Letter – May 04, 1956

Tabell’s Market Letter – May 04, 1956

Tabell's Market Letter - May 04, 1956
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—- NEW YORK Walston &Co. —-Inc — Members New YOl-k Stock Exchange PHILADELPHIA' LOS ANGELES SAN FRANCISCO BASLE (Sw,j,,dl OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER May 4, 1956 General market action improved during the past week with the rail aver age at a new high of 179.54,and the industrials again approaching the April high. Recent action of the market is perhaps best typified by the Dow-Jones 65-Stock Average which has held in a narrow trading shelf between 179 and 183 for well over a month. An upside breakout of this area to 184 would, from a technical viewpoint, indicate an advance to the 190-200 area.Friday's close was terms of the industrial average this would most like- ly mean an approach to the uptrend line connecting the July and September highs .You may recall that our 1956 forecast mentioned the probability that this line would be touched before the tnattffue''the – — -.,- uptrend line was around the 525 level. It has now moved slowly ahead to the 540 level. On the-downside, the s-upport level is the 490-480 area. The mar- ket could hold in this broad 540-480 range for a long time to come while individual issues pursue their own course, regardless of the general market. Figures for the past week are not currently available, but advancing stocks were offset by a large number of declining stocks as well as new 1956 highs by new 1956 lows. This is truly a market in which one must own the right stocks. I am continuing below a review of my recommended list, but because of new developments in some issues, I am not following the alphabetical order. JOY MANUFACTURING ( 50t) reached a new high at on Friday. Des- pite its sharp advance from our originally recommended level (23 1/2 on an adjusted basis) the stock still justifies a Buy-Hold rating. Earnings for the six months ended March totaled 2.73 a share. Earnings for the fiscal year ending October could reach the 6.00 level. At present prices Joy is selling at less than 8 1/2 times estimated earnings. My long term price projection for the stock remains at 75. DRESSER INDUSTRIES (70 5/8) also reached a new high on Friday'at 70 7;8 Here again a large profit is availabJ ,e (originally recommended at 33) but7 . the rat ing remains. Buy-Ho lelo R.-E. Re vic id ent–and se-cpe.ta.-ry- .' – -I treasurer, told the Financial Analysts of Philadelphia that sales for the fiscal year ending October will total nearly 205 million resulting in after-tax earnings of 7 a share as compared to 5.04 for fiscal 1955. At present prices, the stock is selling around ten times earnings, but it is probable that this manufacturer of oil, gas and chemical equipment is entitled to sell at a higher earnings multiple of twelve times earnings particularly in view of its lessened dependence on capital goods and increasep sales in expendable items. My upside objective remains 85 followed by a longer term 105. GENERAL RAILVIAY SIGNAL (80) has been resting after reaching a recent high of 84. (Originally recommended at 59). Earnings for first quarter were 1.64 as compared with 62 in 1955. This improvement should con tinue and, as the first quarter usually shows the lowest earnings, a projection of 9 to 10 is possible. There is no funded debt and only 333,587 shares outstanding and earnings could gain rapidly. The stock is a potential split candidate. My potential upside projection remains 140-150. BUTLER BROS. (26 1/8)is a recent recommendation at 23. The stock has moved above 2' which is a new high since the spin-off of Canal Randolph Corp.(selling at 6 on the American Stock Exchange.) This stock yields over 5 and with a large amount of cash potentially available for new invest- ments, the stockhas possiBilities. ..' WESTERN PAC IFIC RJ-.ILROAD (78) was recommended in my April 20th letter at (2 3/4. SUBject to I.C.C. approval, a 2 stock dividend was de- clared last week and it is possible that this may be repeated later in the year. This road, serving a growth territory, has an earnings potential of 15 to 20 a share when the modernization program is completed. The stock reached a new high of 791/8 on Friday. The intermediate term potential appears to be 105-115 followed by much higher levels over the longer term. EDMUND \II. TABELL \IIJ..lSTON & CO. INC. Thu; marhet Iett2r IS not, and under no Clrcumstnnce') i'l to he const.rued aB, nn offer to sell 01 a AoliClt.atlOn to buy aoy secunhes .referred to herem. The mformat.lon Lootmoe. herelll IS not I!ullrantced as to accuracy or lind thc furnlShlllR thelcnf I' I\ot, and undel no ('\rcumstances IS to be construed as, a repre'lentll.tlOn h Wabtun & Co Inc AU C'l.prCSSlOns of opllliOn arc subJcct to change WIthout IIntlcc Walston & Co, Inc, or any OffICc.r, DIrector or Stockholder thereof, may have all mterest securities men til ned herem '1 hi'! market ettel IS uftcoiled and prebentC,j mCI ely .1; Il J,(eflcl.d, mfOllllaJ commentary on day to tIay mnrkct nev.s and 1I0t flS a complete nnnlysl!. AddltlOnlil mormllt.lOn with respect to allY bC'.UI retci red to hoon ,,111 he fUI upon refuest \VN 301

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Tabell’s Market Letter – May 11, 1956

Tabell’s Market Letter – May 11, 1956

Tabell's Market Letter - May 11, 1956
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Walston &Co. – – – – – I n c . – – – Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Sw,tmld) OFFICES COAST TO COAST CONNECTED DY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER 11ay 11, 1956 Inability of the industrial average to better the April high of 524.37 and confirm the strength in -the rail average brol;ght on a correction and a possible testing of the support level in the Dow-Jones industrial average. The week's intra-day low-was 497.57. The rail average reached its first upside objective of at the week's high of 182.54. The rails should meet support at low was 177.07. There is a possible upside indication of 190-200 after a resting spell in the rails. Below is a continuation of the review of my recommended list. CALGARY & EDMONTON (26) was originally recommended by this letter at – . along by the recent upsur.gecin stocks-,. recent, ly reached a high of 28 7/8. After this substantial move, some resting may be required at around current levels,but continued retention as a long term speculation is advised. The company holds one of the largest acreage spreads and fee-owned mineral interest in t.lberta and is engaged in 'l. comprehensive program of exploration and development. The Pincher Creek gas field, which lies partially on company property, will be opened up by the new Trans- Canada Pipeline 'CHAIN BELT recently reached a high of 74, after being originally recommended at 30-35, and has almost reached its initial objective of 78. A longer term 125 is indicated, however. The forthcoming rights offering -. may cause some pressure on the stock and it will probably require some re- accumulation at current levels. It is, however, still suitable for long term holding. With the near term and longer range fundamental outlooks favorable and with the company's good position in the automation field, sales and earnings should continue the long term uptrend. – CORNELL DUBILIER (32) was originally recommended by this letter at the 21-22 level. The stock recently reached 39 and has reacted to its current price after the omission of the extra dividend and the reporting of poor – first quarter earnings. Since these poor earnings are believed only tempo- rary, hQwever, and, future color TV production is expected to even- tually double or treble- ffle –need for capacitors, Which are –the 0 company's principal product, the stock would seem to have. considerable merit as a long term purchase. J..ction may very possibly be slow but the stock now appears in a buying range for patient holders. At its recent high of III 1/4, CUTLER HAMMER had almost doubled in rrice since originally recommended by this letter at 57. The company is a leading producer of electric motor controls which are used largely in in-dustrial installations and has an excellent long term earnings record desrite the fact that its sales are sensitive to charges in industrial capital requirements. Cutler Hammer is another company which should benefit as – the trend to automation continues as the industrial controls which it manufactures are necessary to the automated handling of materials. The stock should be held for its long term objective of 120 followed by 140. DOW CHEMICAL (68) was originally recommended by this letter as a quality, long term growth issue. At that time the stock was selling at B8-40. However, the original growth potential remains. Although the stockappears high in relation to current earnings, cash earnings, due to accelerated amortization, are much higher than the reported figures. Amortiza- charges should remain high for the next few years, but an upward in ear.nings should nevertheless ,be, .in evidenc.e. From point of view, the long term objective is 95, although some backing and in the 70-60 area may first be required. EDMUND W. TABELL 1J.fALSTON & CO. INC. Thl!l mllrket letter IS not, lind under no ClTcurnl,.llnces IS to be construed liS, nn offer tlJ sell or a soliCitation to buy any securities to herem The mformnt!on byonU Ined herem IS not gUlrnnteed I1S to nccurncy or and the thel eor i'l nol, nml under no .ireumslnn(.es I!, to he construed flS, u Walston & Co Inc All ClI.preS51ons of opinIOn are suhJect to change Without notice ,,',\I;ton & Co. Inc. or any Officer, Director or Stockholder therl!of. mny have fill mter(!'St the seeur-Itlel hereH\ ThiS market letter B Intended and presented merely as a genernl. Informnl commentarJ, on Joy to day m.lrl-ct new'! and not us n complete analYSIS AdditIOnal InformatIOn …. Ith respect to an) securities referred to herem v. III be furmshed upon request. ''IN 301

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Tabell’s Market Letter – May 18, 1956

Tabell’s Market Letter – May 18, 1956

Tabell's Market Letter - May 18, 1956
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( NEW YORK Walston &Co. – – – – – – – – I n c . – – MembeTs New York Stock Exchange PHILADELPHIA' LOS ANGELES SAN FRANCISCO BASLE (SwH,Id) OFfiCES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRe SySTEM TABEll'S MARKET lEnER May 18, 1956 At the week's lows, both averages reached the top of strong support levels and rebounded moderately. Dow-Jones industrial average hit a low of 490.73 off the top of the 490-480 support level and the rails reacted to the top of 173-168 support shelf at 172.58. The rebound from the lows was on small volume and normal technical action would call for a retesting of the support levels perhaps next week. If the averages are able to weather this test, we might witness the start of the traditional summer rally around the end of the month and an advance to the 540-550 level in the industrials and 190-200 in the rails. A failure to hold would indicate the start of a long t-han a sharp .. On for example, the 480 level is an important point to watch. The 200-day movin average now stands at about that level as does the uptrend line connecting the October and January lows. A downside penetration of the 480 level would most likely indicate a lengthy consolidation period with a probable low of around 450-440. It would be a period very similar to 1951-1953 with the aver ages holding in a broad trading area while individual issues pursue their ow diverse patterns. In a nutshell,the action of individual issues will continu to be of much more importance than that of the averages. At last week's lows for example, many of the issues in my recommended list were higher than they were on April 6th, despite the fact that the averages were thirty-five point lower. A review of my recommended list is continued below. CHICAGO CORP.(25)is still holding in the broad 21-27 trading area in which it has held for two years. An upside breakout of this area would have considerable technical significance and indicate a possible rise to the 40- 45 level over the longer term. 1956 earnings should rise over the 1.67 a share reported in 1955 and the dividend,now 257 quarterly,should at least be maintained. Active drilling, exploration and important natural gas pro- duction and reserves present good long term potentials. CITIES SERVICE (66) originally entered my recommended list at 38.The recent high was 70 3!4.The technical upside objective for the intermediate term seeminglygppd support at the 62-60 level. Wider profit margins will pi6bab 10'be – s-howllTor 1956'''ar the-extensi ve – modernization,exploration and development program which Cities Service has undertaken since the war begins to show up in earnings.Fair trade of gaso- line at the retail level may also remove a persistent marketing problem. COLGATE PALMOLIVE (57) has done little marketwise for a long time.ln fact,it has held in the broad 51-64 area since late 1954.While there is no indication of an immediate move, the broad potential base pattern, from a technical point of view, indicates a possible long term advance to 70-75 . followed by 100. Yield is attractive at 5.3. Impetus for an upside break- out of this base could well be provided by recent improving competitive po- sition.While the well maintained earnings of 5.47 appear to make the stock statistically cheap,foreign business is important and increasing. EAGLE PICHER CO. (42) which originally entered my list at 22,reached a high of 47, but still indicates higher levels over the longer term. Recent has brought the stock down close to the strong support level at 42- 40. The technical upside objectjve is the broad 61-77 area over the longer term. First quarter earnings of 1.04 vs. 717 in the corresponding quarter – last year, indicate a strong possibility of further annual earnings increas- es as the company transforms itself from a mining and smelting to a fabri- cating operation. Although sales may reflect the decline in order output, profitmargins,should.improve due.to reduced operating costs at the new sulphuric acid plant.-The historic payout ratio leads totl1.e belierthat dividends should be increased slightly at some time during the year. FOOD MACHINERY (66) was recommended at 51 earlier in the year. The recent high was 71. This issue has a most attractive technical pattern for the longer term with a price potential confriderably above present levels. The intermediate term indication is the 75-85 range. Continue to hold and add to holdings on minor weakness. The first quarter of 1956 saw the com- rany obtain peak results. Sales were up 13 and net increased to 1.19 a share from l.Ol,despite a 25 drop in defense shipments. Backlog in the division increased and it was stated by the management that volume for 1956 will probably match last year's. EDMUND vi. TABELL & CO.INC. Thl'l m.lrl.et letter 18 nut, and under no circumstances is to be construed as, nn ofTer to sell or a sohcltntlOn to buy any securities referred to herein The inforfi1alion contulfi(';.i herem ll not guarnntecd liS aCCUf3CY Uf completlmess nnd the furnnrnlng thQreQf i; nut, and und(r no cIrcumstances IS to beconstrucd as, a reprC8cntlliIDn \l.talston & Co, Inc All l''lpre;Slom, of oplfilUn nrc subJect to change without notu'e vulton & Co, Inc, or any Officer, Director or Stockholder thereof, m3Y have .w mterest In the securitieS mentioned herem Thl'! market letter IS mtended and )lreented merely as a general, mformal eommentary on day to day ne…. s and not as a complete an3lysis AdditIOnal mformatlon with respect to any sccuillieb referred to herein Will be furmshed upon request V. N 301 \

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Tabell’s Market Letter – May 22, 1956

Tabell’s Market Letter – May 22, 1956

Tabell's Market Letter - May 22, 1956
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Walston &Co. -l – – – – I n c . MEMBERS NEW YORK STOCK EXCHANGE AND OTHER. LEAOING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA' LOS ANGELES SAN FRANCISCO LUGANO (Sw;t,ee,d) OFFICES COAST TO COAST CONNECTECo BY DIRECT PRIVATE WIRE SYSTEM EDMUND W. TABELL INSTITUTIONAL LETTER May 22, 1956 Selectivity is probably the most &tusEdword in the lexicon of market letter writers. Nevertheless, it remains the key to today's market. In recent weeks, the Dow-Jones industrial average has declined from an April 9th high of 524.37 to today's low of 481,86. To go back to the last time when the averages were at this level we must go back to Friday, February 24th when averages closed at 485.66. It is interesting to compare the close of that day in selective issues with today's close stock Close May 22nd Close Feb. 24th Joy Manufacturing 50 1/2 39 3/,8' Dresser Industries 68 1/2 5e 3/4 General Railway Signal 80 5/8 69 1/4 Merck, -rnc. , 31 1/4, 26 3/4, Black;.. & Decker 41 1./2 '3l1.. American Viscose u. S. Steel International Harvester Westinghouse Electric 37 54 5/8 34 3/4 53 1/2 50 57 1/4 37 7/8 58 7/8 ThUS, the key to investment timing remains the same. Instead of trying to gauge the action of the market, the energies of the analyst are better devoted to selecting stocks Which will outperform the market. It is still necessary, however, to gauge investment climate. Many factors have been cited to explain the decline in stocks such as dropping auto production, the possibility of a steel strike, a falling bond market, and a host of others. Without going into these fundamental conditions we will attempt to point out a few technical factors which may effect the mar- ket trend. At today's low, the Dow-Jones industrials were dangerously close to a trend line connecting the September 1955 and February 1956 lows.They were also close to the 200-day moving average. Fenetration of these two lines could be said to have considerable significance insofar as the averages are concerned, and a decisive downside breakout would probably end the bull market cycle which began in 1953. As we have tried to point out in the paragraph on selectivity above,this does not necessarily indicate the end of the world — or even a 1946 type market break. Economists such as Sumner Slichter have pointed out that we may have reached the stage in a managed economy where different industries undergo recessions at different times, considerably smoothing the traditional business cycle. It is just possible that this type of action may be reflected in the stock market as indeed it has been reflected in the examples outlined above. The result would be a 1951-53 type market with opportunities continuing for the purchase of carefully selected securities. It is certainly not the intention of this letter to subscribe to any sort of new era thinking. We must point out, however, that in the post-war years prcponents of the rolling readjustment theory have been proved righter than the boom or bust theories. History will ultimately indicate whether or not the market signals have finally been concurred. Meanwhile, it is the function cf this letter to attempt to choose securities and groups which have out-performed thegeneral market regardless of trend. hccording to relative strength studies, the following groups should behave as indicated below FAVORABLE Air-conditioning, Building,Business Machines, Cement, Drug1, Electrical Equip., Gas,Machinery,Oil,Paper, Rails. GOOD ACTION BUT HIGH Aluminum, Glass Containers, Rail EqUipment, NEUTRJ,L Aircrafts, Brass, Chemicals, Communication,Finance, Food Chains,Food Products, Meat Packing,Mining & Smelting, Rubber, Steel,Sugar, Tobacco, Utilities. POOR ACTION BUT H1PROVING Airlines, Coal, Electronics, Movies, Soft Drink, Tin Cans. UNFAVOR''.BLE Autos, Auto Equipment, Farm Machinery, Fertilizer, Liquor, Retail Chains, Textiles. EDMUND W. TJJ3ELL WALSTON & CO.INC. TIII memorandum II not to be construed liS ,111\ offer or ol,cllallon of offers to buy or uell any seCUrities From time to hme W,,'iI()n & Co, or any pdrtner thereof may 1I,,e II,! Interest ,n some or of thll! Itc.untles mentioned IIereln The foregOing mterl,lI has been prepared b.,. us .n a mltter 01 Information only It IS based upon mform!lt,on believed rell!lble but not neceut!lf,ly complete, '5 not gUII!Inleec;t u t!lccu!!Ite or fin!al, !and i5 not 'ntended to foreclou 'ndependent ,nqulrV u , i. t,

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Tabell’s Market Letter – May 25, 1956

Tabell’s Market Letter – May 25, 1956

Tabell's Market Letter - May 25, 1956
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rr. Walston &- Co. – – – – I n c . Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Sw;t,.,lond) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lEnER May 25, 1956 The 490-480 support level in the Dow-Jones industrial average failed to halt the selling and the average dropped to a low of 469.31 on Friday, , a decline of approximately fifty-five pOints from the April high of 524.37. This just about equals the Eisenhower decline of September-October in pOint , \ although the percentage decline is somewhat smaller. The rail average also dropped below its 173-168 support to reach a low of 164.23. Considering the scope of the decline, volume was relatively small with no single trading sess'ion 'even''reach!ng the three-mi'll-i-on-share-t.ransact'ken lev,el. The industrial average not only broke the 490-480 support level but also penetrated the uptrend line connecting the October and January lows and, even more important, also broke the 200-day moving average of prices / which has held intact since the rise from 254 started in October, 1953. In / addition, the total declining volume for the past twenty-five weeks reached a new high since early 1955. All these technical indications would indicate that the market reached a top at 524.37 in early April and that thE 270 point advance of thirty months duration from the October, 1953 low of 254 has ended. The sequal should be either a 1946 type of decline of 25 or so (395 on the industrial average) or the 1951-1953 type of consolidatior in a 15 trading range (445 in the averages). Of the two alternatives, my technical work favors the probability of a 1951-1953 type of consolidation. In fact, that was the pattern for 1956 that was outlined in my annual forecast in December. At that time the industrial average was selling at 485. Based on statistical, technical and psychological factors, I 'expected highly selective action in 1956 ranging from a 520 top in the Dow-Jones in- dustrials to a low of 430-420. I further said that the broad economic pat- tern and the more intelligent approach to investing 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 aver- . age s tw,o someind i were advancing while others were declining. While all of was happening, other groups were resting and slowly forming reaccumulation patterns in pre- paration for the 1953-1956 rise. I see no particular reason to materially change the forecast today. The average advanced to about the 520 level (524.37 in April) and has now declined to about 470. It turn out that my guess of five months ago of an eventual low of 430-420 may be too low now that more technical data is available. The whole 470-420 area is one of broad support in which the average has swung up and down for over a year. The eventual low could be anywhere in this broad range. For the nearer term, the low will probably be around the 460 level. My intermediate term technical indicator, which signalled a sell in late March, has not yet given a buy signal despite the sharp decline, but is in a position to do so in the next week or two. After the ensuing rally, the patterns will be clearer as to the probable low of the broad consolidating area in which the market may hold for a considerable period of time. All of the above is purely of academic interest and is written to avoid answering the inevitable question of vlhat is the market going to do The sooner we realize that there is no longer a stock market in the former sense of the word but rather a market of fifteen-hundred or more 1isted stocks, the s,ooner will our investment and speculative objectives become clearer. In – the'market, I envision over -the foreseeable future there will be plenty of opportunity for price appreciation in selected issues as well as the risk of decline in others. The stocks I like are in my recommended list. Fortunately, they have, in the main, shown better than average action both on the advance and decline. and deleted. The list will be reviewed continuously and issues added EDMUND vi. TABELL HAISTON & CO. INC. ThIS market Jetter lS not nnd under no circumstances IS to he construed as, an offer to seJl or n sohcltatlOn to buy any securities referred to herem The mformntlon contnined herem IS not ns to nccurnCY or CQmpieteness and the thereoC IS not, and under no Circumstances IS to be construedhn1d8 I Walston & Co Inc Ail ('xprCSSIt)ns of opinion are Rubect to change without notIce. \\'1118ton & Co, Inc, or I1ny Officer, Director or tock 0 cr ereo, may an Interest thc secunbe! mcntlOned herein ThiS market letter 1; intended and prcllcnted merely as a Iteneral, un to day llC…. S and not I\S a complete Addltionalmformatl)n 'ftith respect to an) securities referred to heteln 'Ill be furnished upon rcques

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