Viewing Month: October 1956

Tabell’s Market Letter – October 05, 1956

Tabell’s Market Letter – October 05, 1956

Tabell's Market Letter - October 05, 1956
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r Walston &Co. .- -. . . . . . . . . .- – I n c. . . . . . . . . . . . . . . . . . . . . MembeTs New YOI-k Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (SwUm/.nd) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LmER October 5, 1956 If one wishes to be interested in what the market is doing as reflected in the price swings of the various averages, the Dow-Jones indus- trial average met the first test successfully during the past week by holding in the strong 470-460 support level. The week's low on Monday of 463.83 was followed by a sharp rebound to 484.06 on Wednesday and a close for the week of 482.42, At the week's high, the market had, in a little over two days, recovered almost a third of the 60-point drop from the August 2nd high of 523.33. This recovery appears a bit too rapid and normal technical procedure appears to call for a re-testing of the lows by a possible dip to –around the 470 level.–If thi-s- price- acti-on occursoverthe-l'lextweek-,o.I'….–'ten days, it is possible that my technical indicator might register the first buy signal since the sell signal given late July. The lows of October 1st now become a rather important testing point, particularly if the current rally continues for another couple of weeks. A subsequent decline below 463.83 would suggest that trading between the double top of 523.33 of April and 524.37 of August was a distributional area with a downside potential of 430-420. This is the worst I could envision out of the present pattern. However, the action of individual issues indicate a very good possibility that last week's low in the industrial average will hold. All of the above is largely of academic interest. The action of many individual issues continues to bear little relationship to the averages and, as this letter has constantly stressed, this divergence is likely to continue for the foreseeable future in a market where the professional manager of institutional funds has taken over the reins from the shorter term trader. A study of the price action of over a thousand individual issues indicates that a sizeable group of stocks continue to show favorable action while another group still indicates lower levels and a still larger group show no Signs of any immediate move of great importance in either direction. various be a further extension of the broad consolidation area in which the general market has held for well over a year. It will be similar to the 1951-1953 consolidation area when the industrial average held in a 15 trading range for twenty-eight months. The present market has held in a similar trading area for only fifteen months. Among individual the steels have been outstanding. U.S. STEEL at Friday's clcseof67 3-4 ',as still higher than on August 2nd despite the fact that the industrial average is 45 points lower. The same applies to the two metallurgical steels in our recommended list, ALLEGHENY LUDLUM (53 and CRUCIBLE STEEL (60 All three of these issues appear attract- ive on minor weakness. Three other recommended issues, GENERAL RAILWAY SIGNAL GLENN L. MARTIN 89518)and NATIONAL DISTILLERS (285/8 )are also selling above August 2nd prices and continue to show very strong rela- tive strength action. Other issues in our recommended list that appear at- tractive because of either good relative strength action or because they are near strong support levels include – Price SUI2I2ort Level — – —– American Cyanamid Bell & Howell Carborundum Corp. Columbian -Carbon -. Eagle Picher Food Machinery Magma Copper Northern Natural Gas Panhandle Eastern Western PaCific 69 3/8 40 3/( 41 1/4 48 3/4 43 63 107 47 1/4 94 3/4 68 1/2 63-58 37-35 -.— 40-38 -4'( 40-38 63-58 100-95 46-44 87-83 67-63 – – — kll of the sixteen issues mentioned above have substantial upside potentials over the longer term. EDMUND W. TABELL WALSTON & CO.INC , ThlS market letter 18 not, and under no circumstances 19 to he construed as, an offer to sell or a 6ohcltataon to buy Ilny secut'ltle'i referred to herem. The con taL ned herein lS n(;lt guaranteed as to or complctcnc'ls and the furmshmg thereof I' not, and under no CLrcumstnnccs IS to be rer;CSC1tntlo by Walston & Co Inr All expressions of opinIOn are 'lubject to change Without notice Walston & Co. Inc, or any Officer, Dlredor or toe 0 er ereo, ffikllY have an Interest the mentIoned herein. ThiS market letter IS mtendcd and merely as a general, InfOrmll rommenlary on to news and not R8 1I complete nnalysis AddltlOnalmformatlon With respect to any IICCUrltlCS referred to herem …. 111 be furnished upon request /' /' ..

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Tabell’s Market Letter – October 12, 1956

Tabell’s Market Letter – October 12, 1956

Tabell's Market Letter - October 12, 1956
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WalstIoncn, &Co. Membe1's New Y01'k Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN fRANCISCO BASLE (Sw,hl.nd) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM I I, TABELL'S MARKET LETTER October 12,1956 The stock market, as measured by the Dow-Jones average, continued to advance last week reaching a high of 491.18. It is problematical just as to how far the advance will continue, but normal technical action would call for a 1/2 to 2/3 retracement of the cO-point decline. This would indicate an objective somewhere in the 490-500 area which coincides with the heavy overhead supply at 500. This letter continues to stress, however, that the action of the averages is secondary to that of indiVidual issues and continues to recommend the purchase of attractive issues close to suppoJ levels, regardless of the action of the general market. . EAGLE PICHER COMPANY Statistics Eagle Picher was originally Current Market Current Dividend Current Yield 43 3/4 2.20 5.0 recommended by this letter some years ago at a price of 22. At the time it was felt that management', efforts to diversify and expand il Long-Term Debt Common Stock 15,000,000 1,077,677 shs. to fields other than lead and zinc would eventually payoff in sharp expanded sales and earnings. It Earnings per Sh. 1956-E 5.50 pointed out that, by 1954, the cor Earnings per Sh. 1955 5.06 pany had become a rr.ajor supplier ( automotive parts, cellophane and Sales,1956-E 120,000,000 polyetheline food wrappers,plasti 5ales,1955 114,480,000 and various other products supply Mkt. Range 1955-56 47 3/8 – 27 a wide range of industries. Indee(, the portion of zinc and lead sale to total sales had been reduced t 30, and 70 of sales were in outside lines with the auto industry a major customer. Under stimulus of this diversification, common share earnings expande sharply from 1954 into 1955. Earnings reached 5.06 per share vs. 2.47. In 1954, sales were close to 115 million vs. million. In however, the company felt still anothe,r favorable effect of its diversificaticn program, namely, the stability by serVicing numerous industries rather than a single industry. ThUS, although the com- pany is a major supplier to the automotive industry, earnings for the first three quarters of the fiscal year to end in November were 3.63 per common share vs. 3.36 the year before. Full-year earnings are estimated in the neighborhood of 5.50 vs. 5.06. 1956 figures exclude a non-recurring profit of 1.38 arising from the sale of Mexican mining properties. The lack of a dynamic improvement in earnings so far this year has caused Sidewise action in the stock despite the fact that the small im- provement shown must be regarded as a major achievement conSidering the fac i that sales to the auto industry during 1956 were off sharply. With auto salE picking up in 1957, earnings could well approach 6.50 or more per share, making the stock seem rather underpriced at current levels in the low 40s. One major questionmark is,of course, the government lead and stoc'kpiling program which is due to expire in December and mayor may not be continued. Many industry experts feel, however, that the program will probably be continued and even were it to terminate, only a temporary squeeze on profit margins would take place. Therefore, even with discon- tinuance of stockpiling, 1957 net should compare well with priced at eight tim'es earnings and affording a 5 yielr1 1cn95-6t.hCe ur'rently recently increased 2.20 dividend, Eagle Picher seems to represent an outstanding vehicle for capital growth. The stock has a long term technical objective of 61 followed by 97. For the near term, an upside breakout of the 39-43 range in which the stock has held for most of the year would indicate 51. Strong support is evidenced at 41-39 and the stock is recommended for purchase for income and 'capital gains accounts. EvlT lamb EDMUND vi. TABELL WALSTON & CO. INC ThIS market letter is not. and under no Circumstances 15 to he construed as, an offer to '1ell or (l soiLcltntlOn to buy any seCUritIes Feft'rred to herem The mformation contained herem IS not gUllrnntced as to ,\CcurliCY or completeness dni! the iurnishlflg thereof IS not, and under no Circumstances IS to be construed as, a representatIOn hy Walston & Co, Inc All expreSS10ns of opmlon are subJect to chanRc without notice Walston & Co, Inc. at any Officer, Dlreetor or Stockholder thereof, may hllH' un interest In the securities mentIOned herem ThiS market letter IS intended and plescnted mereh as 11 generui. mformal commentary on day to day news und not as Il complete nnnlYSls Addlt10nal Information With respect to any S('Lurltlcs referred to herem Will be furnished upon request \\ N 301

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Tabell’s Market Letter – October 19, 1956

Tabell’s Market Letter – October 19, 1956

Tabell's Market Letter - October 19, 1956
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Wdlston &- Co. Inc, .;…………. 111embe,'s New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Swit,ld) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER October 19, 1956 General strength characterized the stock market during the last two days of this week as the Dow-Jones Industrial Average carried forward to 489.46,as compared with a low of 481.57 on Thursday and a high of 493.01 on Monday. The Dow-Jones 65-Stock Average reached 173.41 compared with Thursday's low of 170.62 and a Monday high of 174.08. Based on probabilities, it appears that my technical indicator will finally give a buy signal some time in the latter part of next week. This buy signal will be the result of a strong positive market trend rather than an oversold condition. Reasons for the strength are not hard to find. Political polls continue to report unexpected strength for Mr. Eisenhower and .. to be -ltttle doullt orMs election. This is in contrast t'o the'feefing' -, – which prevailed a few weeks ago when the Democrats appeared to be drawing converts and there was talk of the Maine a'nd Alaska elections and a farm revolt. Despite Mr. Eisenhower's great personal popularity and the near certainty of his being re-elected however, there appears to be little chance that the Republicans will capture control of Congress so that we appear to be facing another period of a Democratic legislation oppossed to a Republican executive branch. The favorable political picture probably has a great deal to do with the recent and anticipated stock market strength. It does not, how- ever, in any way alter the prediction made by this letter a year ago that selectivity will be the key to stock market success. Our original tion of a trading range in between roughly 525 and 440 for the Dow-Jones Industrial Average was for the year 1956 and so far it has been close to being correct. There is little reason at this point why the same type of action should not continue through most of 1957. This prediction is based on many technical factors, one of the most important of which consists of studies of total trading volume. The 25- week moving average of volume of trading on the NYSE reached a peak of around 390 million shares in March, 1955 and shortly afterward dropped off sharply to a current level in the neighborhood of 250 – 300 million shares. To grasp the significance of this decline,however, it is necessary –to -break-it and downside days when the market closed up and on days when the market closed down. When volume reached the 390 million share peak in March,1955, about 260 million of this was upside volume as contrasted with 130 million downside volume. The latest study showed a negligible rise in liquidating volume from 130 million to 140 million so that the entire drop has come from waning upside volume, a drop from 260 million to 120 million shares. In- deed, upside and downside volume have over the past eight months been run- ning approximately even. Based on this and on other technical studies, plus a fundamental study of price earnings relationships of leading stocks,there is no reason to expect a rampant bull market at this point. Neither is there any reason to expect a general decline. It is, as we have repeatedly emphasized, a market where selectivity will be most im- portant,where individual issues will strongly outperform a lackluster stock market. It is to this type of issue that the investor should confine himself. Attractive issues at this point can be grouped into two classes. First, securities whose relative strength has been exceptional,which have moved up in the face of sidewise action in the general market.Prime examples of such equities are most steel stocks where an improving near and long term earnings outlook has been reflected in advancing prices for the shares. The second group of stocks which would seem to have appeal at this point consists of securities which have experienced consolidations or ions in price and which now appear close to support levels.Many such securities may be discovered by a study of our recommended list. In summary, the outlook is for a stock market during which the investor, in order to do well, must critically examine the technical and fundamental position of every issue in his portfolio. He must ask himself in the case of each security whether there is an objective reason for holding it, or whether better opportunities would be available elsewhere. Selection and analysis will pay dividends, regardless of the action of the averages. EDMUND \'/. TABELL AvlT '! amb vlALSTON & CO. INC mal kct letter 1'11101, and under no circumstances IS to be construed ns, nil offer to sell or n follcitatlOlI to buy nn securIties ,referred to herem. The contamed herem IS not guaranteed ns to nccurac) or complctcnc'It and the furmshmj.( thereof IS nt, and u,nder nn cLrcuomr',tnncCblS to;,c I \'1 I 8.. C I All n r opmlOn nrc subJect to change without notice \\'dlston & Co, nc, or nny Icer, Irec r or oc thCc herem ThiS market letter mtended and pre'ltnted mer…ly as a i'!llbral' mfohdal commenta;y on day to news and not as a eomplcte analysl' Additional information wIth respect to any BC'CUrltles referred tu herem 'I e urnlS e upon rcqucs may k

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Tabell’s Market Letter – October 26, 1956

Tabell’s Market Letter – October 26, 1956

Tabell's Market Letter - October 26, 1956 page 1
Tabell's Market Letter - October 26, 1956 page 2
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&Co.WalstonInc.- Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO 8ASLE Sw;hedd OFFICES COAST TO COAST CONNECTED BY OfRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER October 29, The industrial average, at the week's low of 478.29, has retraced about half of the sharp advance from the October 1st low of 463.83 to the mid-October high of 493.01. This appears to be a sufficient technical correction of the too rapid advance and the market should be in a position to move ahead again over the shorter term. From the present pattern of my technical indicator, it is probable that a buy signal will be given early in the week – possibly on Monday. The rise will be selectivE. (j TIMKEN ROLLER BEARING COMPANY Statistics Timken Roller Bearing is the country's largest producer Current Price 90 of tapered non-friction roller Current Dividend 4.00 5.00 bearings, supplying the major pro- Current Yield 4.4 5.6 portion of domestic requirements. Sales and earnings, while cyclical, Funded Debt & Pfd.Stock None have over a period of years shown Common Stock 2,421,380 shs. an underlying growth trend due to the company's aggressive effort Earnings Per Share-1956-E 10.50 to diversify and broaden its mar- Earnings Per Share-1955 9.13 kets. Thus, although the auto indus- Sales-1956-E 220,000,000 try is the major customer,increasing Sales-1955 196,100,000 amounts of bearings have in recent years been supplied to railroads, Market Range,1956 92 – 62-t machine tool and industrial machiner manufacturers, road machinery and farm implement makers and the paper andsteel indu;trie..&.Due di\'e.r.sificaUon, 195-6earningswill better last year's 9.13 per–c-ommon share, desp-iTe the drop in' 'aut-o in- – dustry output. Net sales will also be some 10 ahead of last year's 196.1 million. A dividend paYout equal to last year's 4.00 is the mini- mum expectation with a strong possibility that a larger year-end extra may bring total 1956 dividends close to 5.00 per share. It appears that, due to increasing demand for Timken's products from a number of sources, the company may be embarking upon a new phase of growth. This growth can be financed entirely through internal means as the company's entire capitalization consists of 2.4 million shares of common stock and net working capital is a huge 60 million or almost 25 per share. The rising demand. for Timken's products mentioned above can be expected to come mainly from two sources the auto industry and the rail- road industry. During recent years, under continuous urging by Timken, the auto makers have made a great deal of progress toward standardizing the number type of roller bearings used in their cars. Due to this standardization, Timken has been able to construct a high-volume,almost fully automatic, assembly plant at Bucyrus,Ohio. It is understood that this plant has by far the most favorable cost structure in the industry and is able to produce bearings at record low prices. The plant was en- gineered and developed entirely by Timken and it is expected that it will enable Timken capt-urea growing market. -;— Perhaps the most dynamic expansion possibilities for Timken, however, lie in the railroad field. It is a commonly accepted fact that freight cars operating on roller bearings far more than justify their extra cost in maintenance savings as compared to cars equipped with the standard journal box friction bearing. Heretofore, railroads have been reluctant to equip their cars with roller bearings due to the fact that the cars might well spend a good portion of their life on other lines and little of the advantage would accrue to the railroad owning the cars. However, under constant prodding by the Association of American Railroads, This mnrket letter IS not. 1L1lt! UllLler no circumstances IS to he construed as, nn offer to snH or '!- solicltnhon buy any to ,;cr;ll. conttune1 her(!ill IS not guaranteed as to accuracy or completeness and the thc,re.of,ls not& 'Cnod ut er II Walston & Co Inc AU expreS'lIOIl'l of oplnJon are subJect to change Without nobce ston ,ne., 301.In mterest the seeulltlCs mentiOned herem market letter IS mtended and pre&cnted mereh liS a no or calnfcyuOfsf I Ienerai, mfohdal eommcntay on day thereof, may kt to dRy.;;/ nc\\'1 anci not as a complete analySIS Ad(htlOnal mformallon With respect to any referred to herem will he furllls e upon reques . '''dry Ii L td r)….. .- .. ……. / — ..— – .4 ,,'-.- – – – – – – – – – – – – – – – – -2- the roads have of late been far more active in installation of roller . . bearings. This demand has been haghtened by the fact that, with diesel- ization almost complete,the roads have more money to spend on other ' forms of capital improvement and by the fact that Timken has been able \ to sharply reduce costs of roller bearing installation. To supply the new railroad demand, Timken has made plans for an automatic assembly line at Columbus, Ohio, incorporating the advanced features of the auto bearing plant at Bucyrus. This facility will be in operation by mid-1957. . An idea of the potential size of the railroad bearing market can be shown by the fact that according to the latest figures there are more than two, million .fr.eight cars. operating in .the. Uni-ted- Sta-tes.-Of -, these, only 28,000 are now equipped with roller bearings. Thus, Timken appears to be in a position where it will be faced with sharply expanding demand over the next few years. With finances more than adequate to meet any additional capital needs, the fruits of this demand should show up directly in per-share earnings. Another plus factor in meeting the demand will be the company's integration. It is currently, in addition to being a bearing manufacturer, an important alloy steel producer with an annual ingot capacity of 700,000 tons. About one-third of this capacity goes into Timken's own products with the other two-thirds being sold. As more bearings are produced, steel production can obviously be diverted to Timken's own uses and with the anticipated large demand for alloy steel continuing, profits should be realized by sale of the remainder of output. The outlook for rock bits, and other miscellaneous items, contributing a small portion to Timken's sales, aTso continues favorable. As mentioned above, 1956 sales are estimated at 220 million, with net earnings at between 10 and 11 per common share. For 1957, sales could well reach 250 million, with earnings of 13 to 14 and .A-..continued-expansion-w.i-l-lprG.bably -be-shown i-Rto;1958 capitalization and hugewcrking- capital posi.tin provide the stock with a high investment rating and permit a fairly high rate of dividend payout. '- -.- The nearer term technical objective is 104 followed by much higher levels over the longer term, with a price level of a possible 200 or more. There is strong support just under the current market. The stock is recommended as an excellent vehicle for capital appreciation combined with generous income. AWTamb EDMUND W. TABELL WALSTON & CO.INC.

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