Tabell’s Market Letter – June 15, 1956

NEW YORK Walston &Co. – – – – I n c . Membe!'s New YOTk Stock Exchange PHILADELPHIA' LOS ANGELES SAN FRANCISCO BASLE ISwa,ld) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER June 15, 1956 FOOD MACHINERY & CHEMICAL CORPORATION Statistics Current Market Current Dividend Current Yield ,—- ommon 'stocK 66 2.00 3.3 41 557 000 13083000 The term growth industry has been rather freely applied of late to many industries in our economy. There are a number of industries, however, for which the term may we by justly used in in the Earned per Share-1955 4.53 show a future growth substantially Sales-1955 264,619,766 in excess of gross national product over the next few years. One such Mkt. Range 1955-56 71 – 47 industry is the chemical industry. Another is convenience type food packaging. Still another is materials handling. And still another is synthe- tic rubber and petrochemicals. When a company can be found with an exceller position in all of these fields, it certainly deserves the scrutiny of the investor. When that compaqy is selling at less than 15 times 1955 earnings and less than 12 times anticipated 1956 earnings and, in addition, commands a first class investment rating, it becomes apparent that sound value is offered. Such a company is Food Machinery & Chemical Corporation. Food Machinery's business can be roughly divided into three divisions chemicals, accounting for almost 50 of volume; machinery, mostly concerned with the growing and handling of food, about 35; and military products. The important chemical operation is carried on through a number of divisions. Most important from a sales point of view is the agricultural division producing insecticides, herbicides, etc. These products can be ex- pected to have a growing demand as farming methods become more and more mechanized. pTehreo-cxo1mdpeaannyd'soBfhececro- Chemical division is an bxygen-'cfiemi'c-als, -wh-ile- important producer fhe- rnterm'ounta'ifI- Chemical Co., 90 owned, produces high quality soda ash. The Westvaco Chlor Alkali Division, now undergoing extensive modernization, produces Chlorine and Carbon Bisulphide, while Westvaco Mineral Products Division manufacture potassium phosphate compounds which are finding a growing market in liquid detergents. Chemical sales are growing in importance to Food Machinery and in 195 for the first time they accounted for over 50 of non-military sales. Total sales of chemical products for 1956 may run more than 15 ahead of last yea, It is expected that by 1960 chemicals may account for better than two-third of total volume. The machinery division produces agricultural equipment, pumps, canning and freezing machinery, and packing and packaging equipment. The last three items should attain more and more importance in line with th sharply rising trend in pre-packaged foods which afford more leisure time to the housewife. The Food Machinery story would not be complete without mention of Petro-Tex Chemical Corporation, jointly owned with Tennessee Gas Transmissic The company is an important producer of petrochemicals and recently acquirec a butadine synthetic rubber plant from the government. Food Machinery will probably receive a dividend from Petro-Tex for the first time in 1956. As can be seen, a large part of FDM's sales consist of true growth growth; sales over athree tofive year period may well be expected to reach 400 million, including the equity in Petro- Tex, as against 264 million this year. Earnings on this sales base could well approach 9 – 10 per share. For 1956, sales may approach the 300 mil lion mark with earnings between 5.25 and 5.50 per share. Based on this projection, the long term technical outlook may well be realized. The stock has an upside potential of 185 with support at 60-57. I is accordingly recommended for purchase. EDMUND W. TABELL 'vIALSTON & CO. INC '\ ThIS mnrkd letter IS not, Ilnd under no Clrcumqtllnces IS to he construed as, an offer to sell or a sohcltlltJon to buy any securities ,referred to herem. The mformatlOn \ contained herem IS not Aunranteed as to accuracY or completeness nnd the furmshlnv; thereof IS not, Id under no Circumstances IS to be construed RI, R representation 1\ by Walston & Co Inc All c..preS810ns of opinIon arc subject to change Without notIce )ylllqton & Co, Inc, or any Officer, DIrector or Stockholder thereof, may \ have an Interest the seCUritIes mentIOned herem ThiS market letter IS mtended Rnd Prcsented merely as a genernl, lllforrnlli eommentury on duy to dll)' market n.w,ndno.t….mPI.t.ana'Y''' ..'' \I