Viewing Month: October 1957

Tabell’s Market Letter – October 04, 1957

Tabell’s Market Letter – October 04, 1957

Tabell's Market Letter - October 04, 1957
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Walston &Co.——–Inc.– Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Switml d) OFFICES COAST TO COAST CONNECTED BY OIRECT PRIVATE WIRE SYSTEt.4 TABELL'S MARKET LEnER October 4, 1957 After reaching a high of 468.15 in the Dow-J ones Industrial Average on Wednesday, the rna rket reacted to a low of 460.71 on Friday. Comparable figures in the Standard & Poor 500-Stock Index were43. 39 &42. 66. Market action still appears positive and constructive, but further backing and filling in between 450 and the supply at 470 appears indicated. A downside penetration of 450 would indicate 430 and an upside penetration of 475 would indicate 490. Neither probability appears likely at the moment, although the market may build up a base for a fairly significant upside move later on in the year. Meanwhile, individual stocks show diverse action. Many stocks in the consume r goods group, which this letter has favored over the past month, have performed very welL Other groups, such as the paper industry, show improving relative strength onde- clines, thus indicating that long term bottoms may be at hand. Concentration on indivi- dual groups and stocks will remain the key to investment success. ', 'c GIMBEL BROTHER S Current Price Current Dividend Current Yield 26 5/8 1. 60 6.10/0 This letter has recently pointed out some of the favorable characteristics of retail store stocks in the Funded Debt 4.50 Cum. Pfd. Stk. Common Stock Sales – 1957-E Sales – 1956 54,912,307 107,137 shs. 1,954,600 shs. 375,000,000 350,897,920 current market. We have pointed out that consumer disposable income is expected to rise to around 295 billion in 1957, a 30/0 gain over the 1956 figure. We have also pointed out that, so far in 1957, retail sales Earn. Per Sh. 1957-E 4.00 Earn. Per Sh. 1956 3.60 Mkt.Range 1957-56 283/4 – 23 1/8 Note Sales and earnings figures are for fiscal year ending the following J an. 31st. are holding at around 50/0 above the 1956 figure and current prospects point to the largest Christmas sales in history taking place this winter. On this basis, favorable earnings comparisons for many department store chains are virtually assured. Added to this favorable outlook is the fact that due to lack of growth in earnings in recent years, department store stocks have advanced very little from their 1953 lows and are currently available at extremely generous prices in relation to earnings and dividends. Indeed, for the nine stocks in the S & P Departm ent Store Index, the average yield was 6.40/0 and the average P /E ratio 9.3. This lack of growth, however, has been due to heavy start-up expenses in connection with new branches, a factor which is ex- pected to become less important as time goes on. One of the most attractive stocks in the retail trade group appears to be GIMBEL BR01HERS, which is now statistically even cheaper than the average stock in this de- pressed group. The reason for the relatively low price to earnings ratio accorded GI is ostensibly the erratic earnings record shown by the company heretofore, plus the heavy proportion of debt in the company's capital structure. It can be argued that Gl's recent aggressive program of expansion into the suburbs now makes it far less subject to cyclical fluctuations. In addition, although debt is heavy, Gimbel has not followed the usual industry practice of selling its land and buildings to a real estate subsidiary. Thus, on a consolidated basis, Gimbel's capital structure is probably fully as conservative as that of the average department store company. The company's growth record can hardly be slighted. Since 1951, it has shown a steady growth in earnings from 1.59 per share to 3.60 per share in 1956. It has furthermore improved margins substan- tially during this period as more high profit suburban outlets came into operation. 1957 sales are expected to set a new high at around 375 million and per share earnings should reach the 4 range. Currently priced at only 6 1/2 times anticipated 1957 earnings, with a further improvement expected for 1958, Gimbel appears to combine substantial price appreciation prospects with generous yield and defensive value. The current 1. 60 dividend provides a 6.10/0 yield and this dividend could well be increased as earnings continue to improve. From a technical point of view, the stock has a long term upside obj ective of 45, with Sl'FF9'F JHIi unag. g,UPF9Rt lQUQ.tl!ilu It is P8eeRlRlF1S8e. fSI pen in both incornc gllQtnolld Qldlf!l N'I m4qzpstances LS to be construed os, an offer to sell or a soliCitatIOn to bu) any seCUrities referred to herem The mformatlOn twn 8.. Co, In.- All expressions or completeness and the \llJl of OPiniOn are subJC'ct to change-WMidUt'r1'cnibt'\\'\'sfon &J;-ect-'trld'-;'irltd IS to be construed as, a reprcsentnOfficer'!, DIrectors, Stockholders and A 11n'lnhtl llurcha!oe, sell and may hR\e an mterest In the secuntlc'l IHtrJ..mJi!.I;J\-Mientllry on clay to day market nev.S and not as a complete and presented n'l a an)' securIties referred to hcrem he flll'nlshcrlllpon \\-.. 301 2

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Tabell’s Market Letter – October 11, 1957

Tabell’s Market Letter – October 11, 1957

Tabell's Market Letter - October 11, 1957
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Walston &- Co. – – – – I n c . – …;. Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE ISw,lml.nd) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM o. fABELL'S MARKET LmER October 11, 1957 The largest stock market decline in over ten years continued this week until a rally narrowed losses on Friday. At Friday's intra-day low of 434. 15, the Dow-Jones Industrial Average had fallen 200/0below the July high of 522.20. This is the most severe decline since the 1946 drop of 230/0. How much lower can the market go . .,. In-our 1957 forcecast, 'published last . . – would see a wide trading range in the averages bounded roughly by 5 20 on the upside, and something like 440-420 on the downside. This prediction has not yet been inva- lidated. The thing that has worried most investors has been the sharpness and sever- ity of the decline. It is now important to examine our original forecast to see whether it should be revised. To see, in other words, whether the market is going to continue to drop sharply below the current lows. In examining the possibilities, both technical and fun- damental factors must be assessed. From a technical point of view, a chart of the averages alone would indicate the possibility of considerably lower levels. However, when one examines the technical pattern of individual issues, it becomes apparent that many stocks have reached what appear to be their long term downside objectives – some having declined 500/0 and 600/0 in the process. A few look still lower it is true, but they are greatly outnumbered by stocks which are close to downside objectives and by strong stocks which have maintained bullish patterns throughout the entire market decline. From a fundamental point of view, any further substantial declines would move .the price -earnings r,atio ,,pCtheDow – and. that oLma!lyindivid1J.a),!;!tocks — .down to which have not prevailed in many years. There will undoubtedly be a decline in business in 1958, probably a healthy thing in an economy which had become obsessed with per- manent inflation and permanent prosperity. Is the decline going to be so severe as to warrant new depths of pessimism This is hardly probable. The anticipated business weakness has, after all, been brought about by a credit policy designed to moderate long range forces which had caused an unprecedented boom. As has been repeatedly pointed out in this letter, these forces still exist. The current policy of restraint will certainly be moderated as soon as any important downturn in business occurs. The long range forces should then be free to provide for expansion in 1960 and beyond. Such an outlook does not warrant the despair that would be engendered by a further serious decline. There is no way of pointing out exactly where the lows will be, especially iIi a market which has declined as sharply as this one has. There is, however. strong reason to believe that we are nearer these lows than many appear to think. While it may not be time for aggressive buying, panicky selling certainly does not appear to be warranted. The attention of the investor should be devoted to discovering good technical and fundamental values which 'can be purchased at depressed levels for long term holding. EDMUND W. TABELL WALSTON & CO.INC. AWTamb This mnrket letter is not. and under no CIrcumstances IS to be construed (IS. an offer to sell or a soliCitation to buy any securities referred to herein The InformntlOn con tamed herein IS not guaranteed as to accuracy or completeness anri the thereof IS not, and under nu circumstances IS to be construed as, n representA- tIOn bv \\ nlston & Co. Inc All cpreSSlOns of OPIniOn nre subject to chanle WIthout notIce YO,'alston & Co, Inc, and Officers. DIrectors. Stockholders and thereot, purchilse, I'ell nnd may have an mterest m the securltle'l mentlOneri herem This market letter 1; Intendefl and presented merely as (l Itenernl. lIl(ormal COfllfllentall on dal t.u day market news and not as a complete (lnalysl'I ArhiltlOnal mformatlon '\llh respect to any sccurltlcs referred to hereIn WIll be furnIshed upon rellUe'lt \\ '\ 301

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Tabell’s Market Letter – October 18, 1957

Tabell’s Market Letter – October 18, 1957

Tabell's Market Letter - October 18, 1957
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Walston &Co. – – – – I n c . – Members New York Stock EXchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Sw;t,I.,dJ OFfiCES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER October 18, 1957 After another week of heavy liquidation, the market drifted off further on Friday closed the week at a low of 432.69 in the Dow-Jones Industrial Average and 40. 18 in the naara & Poor 500-Stock Index. As we said in our letter of last week, it is difficult to p where the actual lows may be, especially in a market that tends to be ruled by emotion panic. Our original projection of 440-420 should still hold good, but could be upset by further deterioration of confidence due to the foreign situation. One fact should not be lost sight of, however. It is easy to say by hindsight that Istocks should have been sold last July when the market was above 500. However, after the decline.it would appear-foolhardy to stock commitments at current depressed levels. This would be true even though the market were to wo (;cHn.ewhat lower over the near term. Amid the excitement of late tapes and sharp declines over the past few months, g appears to have gone relatively unnoticed by most investors. That is, the amazing r performance of the grocery chain stocks. The market, as me asur ed by the Standard & r's 500-Stock Composite,has now declined some 180/0 since its high in July.As of th,the Standard & Poor Index of food chain stocks was actually above its July high and tocks in the group had not declined at all from the July tops. The reason for this appears to be that the food chains offer attraction for any inve ,no matter what his opinion concerning the business future. Even in periods of business IdE!c,ines, the earnings of grocery companies hold up relatively well since food expenditures stitute one of the most stable items in the consumer budget. Taking a more aggressive w,there are a number of reasons for optimism concerning the industry's future. First 0 ,more than any other industry, food store sales should show a direct correlation with 1f.I\J!-,'Ll .vu growth. Our expanding population is causing favorable earnings comparIsons in 957 vs. 1956 and this factor will probably continue to operate in 1958, regardless of the busi'ness picture. Furthermore, in recent years, food chain sales have expanded faster than Ipclpullatiom due to shifts in buying habits. As supermarkets carrying a wide range of non InrOO(IIH'tgrow in import;rice', the -chains ten1fto r dollars- that went to drug, variety chains and department stores. This ShIft to supermarkets also benefits the grocery chain companies internally. Imorf' and more large stores are opened and unprofitable outlets close, profit margins tend improve and the companies earn more on the sales dollar. All these factors point to Iccmtinued growth for grocery companies and make the group one of the most attractlve in consumer goods field which this letter has been stressing for the past two months. Three grocery chains are included in our recommended list. The first of these is AMERICAN STORES (56). American operates a chain of some 900 markets con- entrated in Pennsylvania, New Jersey, New York and Maryland. 763 of these are self- ervice supermarkets and the company continues to open new and modern outlets. 60 such s were opened during the year ended March 30,,1957 when sales were almost 200/0 ead of the preceding fiscal year and earnings improved to 5.81 from 5.49. Sales for 21 weeks ended August 24 were 90/0 ahead of last year and earnings for the full year should improve to 6.00-6.25. A strong financial position makes a dividend hike from the sent 2 rate a possibility. GRAND UNION (32) operates a chain of 371 stores and is aggressively expanding the supermarkets and non-food lines. An aggressive development program has enabled it to widen profit margins and earnings for the year ended February 28, 1957 were up to 2.31, consummating five years of steady growth. For the six months ended August 31st, were 1. 25 vs. 1. 13 and full-year net should be in the range of 2.50-2.75. expansion program makes cash needs heavy and the payout of 72 is relatively small. 1'….111; earnings make it susceptible to a slight increase, however. WINN-DIXIE STORES (26) operates a chain of 473 stores in the Southeast and is expanding rapidly. Earnings ended June 30, 1957 were 1. 71 vs. 1. 68. The comp one of the few which stlll pays monthly dividends and the current rate is 8 a month or 96 annually. An increase here is not beyond possibility. A'NT'arnb EDMUND W. TABELL WALSTON & CO. INC . ThiS market letter not. and undel no CLI(,Umstnncl'S to be construed os, an offer to 'Jell or a '1ohcitatLOn to buy any ccuntle. rererred to herem The mformabon ('oullunerl h('IClll IS not j(unrantced liS to aCrUrllC) or completeness and the furl'llhmg thereof IS not. and undel nu ClIcumslnnces IS to be ron'ltrucd 11 rCJlrcscntn- hun 1,\' '\ulstun & Co, Ill(, All (,,(PICSSlOlll of opinl)l1 me 'luhJect to ch'lnge ,ithl)ut 110tll..C 'Valston & Co, Inc, mvl Offlccls, DlrcLtCls, SLockholdcls and Eml'lyees thereof. Plllrhusc and 111..1)' have an mtcr'st III the 'lecurlti's m'ntlOnen hCI'1I1 ThiS market letter IS mtended and plescnted merely!l.'l a gcneral, In fill mal 1'ummenLlry nil da to dJ. market nc\\s IIlId not as a complcte anaIY'll Ad.htlOn'll lIIformntlOn respect to any SCCUrities referl ed to hCI em will he fUlllllwfi u))on I '(IIlC'll \\-'\ 301 –

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Tabell’s Market Letter – October 25, 1957

Tabell’s Market Letter – October 25, 1957

Tabell's Market Letter - October 25, 1957
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Walston &Co. – – – – I n c . – Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Swa,.,l.,d) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER October 25, 1957 A breathing spell for the average investor has been provided by last week's market action. After sell-offs on heavy volume on Monday and Tuesday, the market rallied sharply on Wednesday, chalking up the largest single day's gain in almost 28 years. The gains were held on Thursday and partially given up on Friday with the Dow-Jones Industrial Average closing the week- at 435.15 'compared with its 'Tuesday 416.15.,,, Comparable figures on the Standard & Poor 500-Stock Index were 40.59 and 38.55. With the market steadily moving downward, it was very difficult for the investor to rationally examine his holdings and to make the drastic changes required by both investment policy and tax policy. The recent strength, as noted above, is providing a breathing spell and it would appear imperative that such examination take place at this time. The first consideration must be the probable near term action of the general market. This letter takes little comfort in the widely-heralded fact that the last time a single rally of Wednesday's magnitude occurred was November, 1929. Let it be said that no 1929 is envisaged here, but it is felt that the Wednesday rally was too sharp and involved too high a degree of public participation to be considered sound. If, indeed, a short term top has not been seen already, a level approximating 450 in the Dow-J ones Industrial average or 42.00 in the Standard & Poor 500-Stock Index, should mark the extent of any near-term strength. Such strength should be utilized for making portfolio changes along the lines consistently-recommended-by this letter. For'three mohths now we -have pointed out the relatively unfavorable outlook for most durable goods producers in 1958. Any further strength from these levels will provide an excellent opportunity for eliminating stocks of this nature from portfolios and for establishing tax losses. In semi-investment accounts, and intermediate term trading accounts, a cash position of 50 should be gradually established, beginning at current levels and continuing on further strength. – Cash thus generated should be utilized on subsequent weakness in order to purchase stocks of the consumer goods type which have been repeatedly stressed by this letter over the past months. This recommendation cannot be stressed too strongly. The average aggressive investor, when consumer goods stocks are recommended, makes the statement that he is interested in a dynamic type of issue and not in a conservative investment type equity. It must be strongly pointed out that if any dynamic upside action takes place over the next year, the chances based on both technical and fundamental probabilities, favor its taking place in the hereto- fore stable consumer goods stocks. It is the former market leaders which will probably show the disappointing drifting-type action. This has not been true in the,past, but the isoftel'! an,unrel!abJ,e tothe future andjhe slccess.ful investor achieves his success by anticipating changes in market sentiment before they occur. Thus, current policy should be one of liquidation of doubtful capital goods issues, starting at current levels and continuing on strength, establishing valuable losses where possible. On any subseque'nt return to around the old lows in the averages, an aggressive buying program in the consumer goods field appears in- dicated. AWTamb EDMUND W. TABELL )orA! STON & CO INC ThiS market letter IS 001, lind under no Circumstances IS to be construed as, an offer to or n sohcltatJOn to any securities referred to herem The mformntlOn l'()ntamed h('1 ('In 11 not gunrlLnlecr! as to accuracy or compiet(lneos nnd the furntshlnJ thereof lS not, and unucr no circumstances I'! to be construed as, a Tepresenta lIOn by ''''II)ston & Co, Jnc All e'lpresslOns of opmlOn are subject to change without notice Walston &- Co, Inc, and Officers, Directors, Stockholders and Eml!luy('es thelcor, purchase, sell and hll\oe nn In the mentioned bcrllm. market letter IS Intended and presented merely ns n general. Informal commentmy on to rlny market nev.s and not as a complete AddltHmal mformatlon \\lth to any securities referred to herein wlll be CUI nlsher! upon re(IUest \\ 301

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