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—- Walston &Co. Inc. Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Sw;hed.,d) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER June 28, 1957 Market action has followed a normal technical pattern. The five day correction from the June 17th high retraced over a third of the entire advance from the February lows and the market now appears to be in a position to resume the traditional summer rally usually experienced in July and August. My technical indicator which gave a secondary sell signal is new-in a position to reverse itself and re-affirm the primary buy sig- nal giveR- near the February lows. Seten stocks were mentioned in last weeks at prices telow the then mar- ket. Six reached suggested buying levels and are now part of my recommend- ed list. They will be reviewed in this letter shortly. Stock Buying level Fridays close American Smelting 57 57 5/8 Chrysler Corp. 75 76 1/2 Consolidated Electronics 31-30 30 Ingersol Rand 80 80 7/8 Newmont Mining 110 110 1/4 Tung Sol Electric 35 34 5/8 BELL AND HOvlELL Statistics How many pictures have'You taken Current Price 40 1/4 lately If you are a typical Amer- Current Dividend 1.00 ican family, you've probably taken Current Yield 2.5 quite a few. You've got more spare money and more spare time than ever Long term debt 7,400,000 before. Besides this you've prob- Pfd Stock(lOO par) 37,243 ably recently had a new child Common Stock 634,340 grandchild. All these things– higher purchasing power, more leisure Sales 1956 45,579,000 time and a high birth rate–have Earned per share 1956 3.84 combined to make the photographic industry one of the fastest growing Market range 1957-55 50 7/8-28 1/4 industries in the United States. Including 4 million 4 3/4 There is no reason not to suppose that this trend will cont- subordinated notes convertible inue, and, as a participation in into common stock at 46 this growth, the common stock of Bell and Howell continues to be On 534,340 shares outstanding at end of period. one of our favorite media. The sales of this important manufacturer of home motion picture cameras have conSistently grown at a rate faster than the industry average. Despite this fact, the stock is priced at 10-11 times anticipated 1957 earnings, making full allowance for the uilution recently caused by sale of 100,000 new common shares. Bell and Howell has long enjoyed a reputation as the Tiffany of movie cameras and its high-priced line of precision equipment has en- joyed an excellent reputation. Recent sales efforts, however, have been directed toward lower-priced, easy-to-operate cameras aimed at the novice market. Band H cameras now sell for as little as 39.95. A comprehen- sive research program has enabled the company to develop new cameras and products which would appeal to the vast legions of new photographers. Typical of these new products was the l6mm Electric Eye movie camera, introduced last Christmas and hailed as the most important advance in movie photography in a generation. With this revolutionary new device, all the photographer has to do is aim his camera, and press the button. A photo-electric cell mounted within the camera makes all the necessary adjustments of lens aperture depending on, light conditions. Undoubtedly future cameras, in a wide variety of sizes and price ranges will incorporate this principle, but Bell and Howell's leadership in the field will give it important competitive advantage. In addition to its amateur line, Bell and Howell also manufactures numerous other products which appear to have a significant growth pot- ential. It is the country's largest manufacturer of sound projectors t h theThis murket letter IS not, Ilnt! under no Circumstances 1'1 tolhe constrUrths, n 0if r t 0 coot-mned herem IS jh h Iby Wal'lon & Co, not Inc J.Cunrnntecd DS to a All expresSIOns of c curmncoyn or corn etencssn e II cOorc nIS snoolit&C.intCantorIlOunInndtcoerbonuroy uny any securlhes irsetfoerbreecdotnosthruereedmas,'Tnhreepmrefosernmtnathioonn Offlccr DJrector or Stockholder thereof, may e,cntcd merely liS gcnernl. commentnry on day to hIICaVv.cS uanndmnteortcasHt aIncuthmepsiccetucraltnlCal'Yl SIS. A Itlonearlmn,orma,mIOanrWI ereespect to any sccurltleS referred to herem \\111 he fUlnished upon request '—- -2- for schools, and sales of this line should continue to rise sharply as new schools are built and the trend toward audio-visual education continues. The company also supplies equipment to the armed services, in- cluding photographic equipment used in the guided missle program. Another highly significant product appears to be microfilm and re- lated machines which are distributed through Burroughs Corporation. Sales here should benefit from the trend toward office automation. Meanwhile expenditures on research continue, enabling Bell and Howell to maintain its leadership, not only in movie cameras but in all its other fields of endeavor. Significant in the research program is a recent licensing with Haloid Corp. involving the xerography or dry photography' process. This process for fast reproduction of photographic images is expected to have application in many fields. In order to finance sharply expanding sales, Bell and Howell recently found it necessary to sell 100,000 shares of new common stock, together with a privately placed 4 million convertible note. This, of course, will mask a large part of any gain in 1957 net. It is possible however that 1957 per-share earnings will come close to equalling last year's 3.84. This would mean a rise in net after taxes to 2.4 million versus 2.0 million in 1956. to be accomplished on A the sli5g0hmt iglaliionninsaplerso fit be margins would ing projected en for able this this year. First half earnings are expected to be lower than last year, but this means very little due to the company's policy of writing off development costs as incurred, while sales of new products do usually not show up until the second half. The conservative 1.00 dividend rate will probably be main- tained as Bell and Howell follows the growth company policy of financing as much expansion as possible through retained earnings. There is still another possible futUre development which, although now uncertain, could measurably alter the Bell and Howell picture. Acc- ording to the recent prospectus, the company is considering submitting a bid for the stock of General Aniline and Film Corp., now held by the Alien Property Custodian. This acquisition would undoubtedly require a good deal of additional financing. It would, however, give Band H an entry into the highly profitable film and expendable item business Which would complement Bell and Howell's sales and give it major stature in the photographic industry. Bell and Howell's favorable fundamental outlook in re-inforced by a favorable technical pattern with a long term objective of 90. Support is encountered just under current levels. The stock is recommended for pur- chasing growth accounts. AWT/wgs EDMUND W. TABELL WALSTON AND CO. INC.