Viewing Month: January 1958

Tabell’s Market Letter – January 03, 1958

Tabell’s Market Letter – January 03, 1958

Tabell's Market Letter - January 03, 1958
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Walston &Co.——–Inc. Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE SwHmld) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER January 3, 1958 After absorbing a large amount of tax loss selling on Monday and Tuesday, the mark moved higher for the balance of the week. An intra-day high of446.08 was reached on the wJones Industrials and 41.02 on the Standard & Poor's 500-Stock Index. In my December 6th letter, I tabulated the effect of tax loss selling on December m kets going back to 1935. To quote Several interesting conclusions can be drawn from thE above figures. (1) There has been a year-end rally in each year even though it has been ver small and of only a few days duration in many instances.' (2) If the market has been higher for most of the year, the Dec. low is usually reached early in the month. The reverse is usu y true if tr'eqd down ..(3) faps t an the Decen er lows are broken in the fi.rst 3 months of the year, the trend is usually either down for the yE r or there is sharp decline sometime during the year. In relation to the present market, it is probable that the lows for December will be reached late in the month. It will then be impor nt to watch the action of the market on the year-end rally. If the Dec.lows hold through the ea 1 months of 1958, the action would be constructive. A decline below the Dec low early in the n t year would indicate a lower or sidewise market for 1958. The December lows were reached on December 23rd at 423.86 on the Dow-Jones In s- trial averages and 39.09 on the S & P 500-Stock Index. If 1958 is to be a good stock market year, these lows should hold for the first 3 months of the year. If they are penetrated on the downside, a further decline to the 400-385 level would be the probability. If the lows hold, a testing of the Nov. 29th intra-day highs of 452.49 and 41. 95 woul be the next step. Enough of a potential base has been built up since October to indicate ano ther attempt to push into the very heavy overhead supply at 450-520. The next attempt could carry deeper into the overhead supply than the Nov. attempt – probably to 465-480. Such an advance, if it occurs, would be extremely selective. The food chains continue to show above average action with several issues reaching new high territory. Food chains raised their dollar volume by about 100/0 in 1957 and rates and earnings set records for the sixth consecutive year. This growth trend should continue with profit margins increasinjCwith more – like American Stores, First National, Grand Union and Winn-Dixie. This letter has mentioned Wilson & Co. (161/2) on several occasions over the past month. The stock reached new high territory for 1957-1958 on Friday at 16 1/2.Hog mar- ketings should be sharply higher in 1958 and the end of the drought in the Southwest means increased cattle supplies. Management has done an excellent job in increasing profit mar- gins and earnings in 1958 couldtc ccnsiden.bly above the 2.19 earned in the f.sca1 year ending Oc;t. 31. Estimates of 3.50 have been mentioned. The company has declared four 25 cent payments for 1958 to yield 6. 10/0 at Friday's closing level. The stock has held in the broad 17-8 range since 1947 and an upside breakout of this long, ten-year trading shelf would have considerable technical significance. Some of the stocks in the electronics-TV group have also shown above average action over recent months. I have mentioned Zenith Radio (125 1/8)Hoffman Electromcs 1211/' ) and Raytheon (22 3/8). In a sense, General Rwy. Signal (23) might be classified as partly an electronics company. Earnings for 1957 should be at least 3.25 and the yield is close at 70/0 on the 1 regular and 50 extra declared in 1957. Backlog of orders has held up well and 1958 earnings should compare favorably with 1957. Hoffman Electronics has developed a solar energy converter panel for a portable solar-powered radio. Gther–appliGations are a.solar flashlight and a solaLhighwaywarn- flasher. This company appears to be in a new phase of growth in the solar evergy, silicon and semi-conductor fields for military, industrial and civilian users. Some of the building stocks have moved ahead in recent markets. The government las made several moves to stimulate housing. The announcement Thursday that the Fede- ral Housing Authority has eased credit rules is a case in point. National Gypsum ( 43) has a favorable technical pattern as do several other issues in the building group. Bell & Howell (43 1/4) should top its earlier estimate of 50 million in sales for 1957 as against 45.6 in 1956. Recently released a new 8-mm movie camera which ad- 'usts automatically to light conditions. Earnings for 1957 should be above the 3.78 earned in 1956 despite an increase of 100,000 shares. Thl! market letter 15 not, and under no circumstances IS to be con5trued n;, an offer to sel,Bnn.filtTfMilii\ 'lj!lJ;BiRtJ5;bferred to hereIn The mformatlOn contained herem IS not guaranteed HS to nccuraCl or completeness nnd the furn IShlng thereoH.flitH, dh1ttlntler rto LI I cumsfii'rice lb to he construed as, a representn- tlOn hv Wal;ton &, Co, Inc All eXpreSSIons of OPInIOn are subject to Wrrtlto\1;\t; uft,QfflcetS, Directors Stockholders and Emplovees thereof. purchase, sell anr! mny an Intel est In the securltlCs mentioned presented merely as a J.tenerul, Informal l'ommcntnry on day to day market nc\\s alld not Il'l a complete andlyql' A(ldltIOn-tI mfflrm.ltLOn \qth IC3PCCt to any seCUrltlcs leferrcd to herem will bc fUrnlhc1i UpLln relllC'lt \\- 101 -.

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Tabell’s Market Letter – January 10, 1958

Tabell’s Market Letter – January 10, 1958

Tabell's Market Letter - January 10, 1958
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— — -W–a–lIsntocn.-&-Co. Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (SwH,..Id) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LmER January 10, 1958 After rlsmg sharply on Wednesday, the market gave up most of its gains in Thursday and Friday trading, and the Friday close of 438.68 in the Dow-Jones Industrial Average was below last weeks closing level of 444.56. However, the market still continues to hold in the trading range which has obtained since the. October lows. On the Dow-Jones 65-stock average, which presents a clearer technical picture, this range has been approximately 142-151. An upside breakout – of this range could mean a return- to about-165-,around- 1956-September 1957 trading shelf. A comparable level on the industrial average would be around 460-470. Massive overhead supply exists at these levels and it would be natural to expect any rally to be halted here. A downside breakout of the above trading range would, of course, probably indicate further market weakness. Many investors, whose interest over the past decade has been centered on common stocks have been paying increasing attention to the high-grade bond market. The reason for this is, of course, that developments in the money market have had a profound effect on common stock prices. Sharp declines in bond prices, i. e. tight money, raise bond yields and make high grade securities competitive with stocks for investment funds. Indeed, the recent market decline is partially explained by the fact that, in July, many high grade bonds were being offered at yields substantially in excess of those available from commons. The natural result was a decline in stock prices. A number of formulae have been devised for discovering an equitable relationship between bond and stock prices. One of the most valuable of these is the Central Value Theory, developed by Mr. BenJamin Graham, author of Security Analysis and The Intelligent Investor, two of the most widely-read financial handbooks. ThisJheory only moneyrates but -earnings as well. Very simply, it takes the 10 –year average earnings on the – Dow-Jones industrial Averages and capitalizes them at twice the current yield. on high grade bonds. This results in a central or median value for the average. In order to allow for high and low investor confidence a range of 20 above and below this central value is then computed thus giving a normal range of value for the Dow. A study will show,that with the exception of the 1927-1932 period the market tended to remain pretty much within the above mentioned range. During the period 1956-7, however, central value dropped sharply as the price of bonds declined. For 1957 the central value was 374. 20 above this figure was 448, indicating that, with the average above 500, bonds were becoming more attractive than stocks on a yield basis. The recent drop in prices has brought the relationship more into line although the market is still much above the present central value. Most interesting in this connection, however, is the present trend of interest rates. From an October high of 4.15, Moody's index of AAA bonds has dropped to 3.68/0. This has raised central value close to 400, and brought the market at least well within the normal range of value. Still more significant, is the fact that a further drop in yields, expected by most analysts, would continue to lower central -value sharply. –'—–eVen if earnings were to aecline. A to 1954 yields of around 2.85 would result in a central value of over 500—which would place the stock market at current levels well in the lower part of the value range and create the most important long term buying spot since 1951. There is, no way, of course of telling whether yields will decline this low—or whether the stock market may not go lower first. The central value theory does tend to point up the fact, however, that the future trend of money rates will have a profound effect on stock prices, and will be one of the most important factors to watch over the months ahead. EDMUND W. TABELL VI itLnelH & eel me. A ThIS market letter IS not anrl under no Circumstances IS to be construed I1S. nn offer to sell or a soliCItatIOn to buy any ;eCUrltJes referred to The information 1'\ not gunrnnteed ns to or completene'S and the furnlShlnR thereof IS !lot, nnd under no circumstances IS to be COnltrued a I'epresentn- H'cltrlly & Co . Inc AU expreSloions of opmlOn are subject to chanpe Without notice & Co. Inc, and Officers, Directors. Stockholders and Eml,loyee.o; thereor, Illlrchuse, sell and may have an mterest m the SecUrltlQs mentiOned herem ThiS market letter IS mtended and prlented merely no; n penernl, mformal commentnry on day to day market news and not as a complete nonlYIHs A.ldltional mformntlon With respect to an) securities referred to herem Will be fUI nlshed upon request \\.i 301 -..

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Tabell’s Market Letter – January 17, 1958

Tabell’s Market Letter – January 17, 1958

Tabell's Market Letter - January 17, 1958
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Walston &Co. Inc. – ….;;.. Members New YOTk Stock Ex'change NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Swit,l..d) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIvATE WIRE SYSTEM TABELL'S MARKET LEnER January 17, 1958 The lowering of margin requirements from 700/0 to 500/0 brought about a sharp rall on Thursday. The intra-day high on the Dow-Jones Industrials of 453.25 was just a shade above the November high of 452.29, but the larger part of the advance was los.t by the close. Further irregularity carried the market somewhat lower on Friday and at the week's close of 444.12, the averages were still within the confines of the broad 450-420 area in which it has remained for three months. As mentioned in previous letters, I believe the important point to watch on the downside is the December low in the averages when.,tax-loss sellingwas -aLits peak.- IL195 8 is.to be a good stock,mar.keLyear, the industrial average should hold above the December 23rd intra-day low qf' 423. 86 for the first three months of 1958. Ability to do this would furnish a very constructive signal. Among the groups that continue to show above average relative strength are the finance companies. There are several attractive issues in this group but; from both a technical and fundamental point of view, I like PACIFIC FINANCE (43). Earnings for the nine months ended September 30th increased to 3.59 from 3.03 earned in the pre- vious nine-month period. The dividend was increased to quarterly in 1957 to yield about 5.60/0 at present levels. The company operates in the growth areas of California and the Southwest. The company owns two insurance companies that write fire and casualty risks mostly on automobiles financed by the company. A life insurance subsidiary was organized in 1956. Pacific Finance has built up a very favorable techm- cal pattern. Ability to reach 45 would be a very constructive indication. I have mentioned three groups that appear to be slowly reversing their down- trend of long standing and are slowly forming potential base patterns. These three groups are building supplies, chemicals and paper. More time may be needed before these patterns are completed, but these groups appear to be interesting purchases during periods of market weakness. AIR REDUC TION, AMERICAN CYANAMID, MONSART,O,SPENCER.aIld- VICTOR CHEMJCAL -a'r-e–in.teresting chemicals to- w-at-ch. FLINTKOTE, MASONITE, NATIONAL GYPSUM, RUBEROID and U. S. GYPSUM are the building supply stocks that should be bought on dips. In the papers, CHAMPION PAPER, MEAD PAPER, SCOTT PAPER and UNION BAG-CAMP PAPER are showing the best relative strength action. Another group that should be watched closely for a possible nearby change in trend is the airlines. This group has been slowly showing improving action and could be near a period of long term strength. AMERICAN AIRLINES, EASTERN AIRLINES, UNITED AIRLINES and PAN AIVIERICAN AIRLINES have attractive long term patterns. For nearer term action, however, KLM ROYAL DUTCH AIRLINES (27) may have more appeal. Earnings for 1957 are estimated at 4.60 after extra depreciation as against 4.42 in 1956 and the stock yields 6.80/0 on the 1.84 dividend. KLM is one of the world's leading airlines and the stock (71.7 owned by the Kingdom of The Netherlands) should continue to show a nice rate of growth. The price range since listing on the New York Stock Exchange in May has been 36 7/8 high and 23 1/4 low. The company serves all six continents through scheduled flights to 109 cities in 74 countries. Another group showing improving action is the fertilizer group. My selection -.in this field would be INTERNATIONAL MINERALS & CHEMICAL (28). On the unfavorable side of the-pictilre, department stores ;;re 'showing declining relative strength and I would lighten holdings m this group during periods of market strength. Continued favorable actlOn is shown by utihties, food chains, tobacco, electronics-TV, aircraft, finance and meat packing. It was noted in last week's letter ability of the Dow-Jones 65-Stock average to reach 152 would indicate a further advance to 162. A high of 153 was reached on Thursday and strength in the rails carried the 65-Stock average higher on Friday despite the drop in the industrials. Strength in the utilities and rails could move this average higher with only a little help from the industrial section. EDMUND W. TABELL g CQ. nqc. ThiS market letter 1; not 'l.nd un.!er no ,,, to he c'Jnstllld .111 Ih.l to 01 n sohutatlOll to buy my securitIes referred to herem The mformatJon cont(l.lncd helem IS not tn ,1rClll lcy.n (olllpletcTlcs; all.! til,' fUl n!'..,hlllg Ihelcof IS ))ot, ,\nd undCI 111) CI\CUIlltHnce to be ns, n repr(!scnta- t!on hy \Vnlston & Cn. All f (o)lI\In 11' t \\l1hllt nOllcc. &. Co. Inc, ,\lId Dlrcetof'l, Str,ehhold(!fb IltHl f'.mploYflC; thelcnf, 1'1l1l'hn;c, ;ell IInll m'l)- hl\e ,In 1ll\t'IC;t III th mentloncd hCICIll llldlket letter 1; Illtnded 1111(1 prcs(.ntcd merely (is a ,,cnCla), ItJfnrmul on to dll\' mHrh(!\ new, anrl Tl(Jt n (oml'lctc fllhlb.h AIII.huon.l InfornHitlon \\Ith rc;pcrt to .In) 'lccurltte; rderrcrl 10 hcrelll \\111 he fUI nl-lhcd upnn request \\;.. 30! ,

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Tabell’s Market Letter – January 24, 1958

Tabell’s Market Letter – January 24, 1958

Tabell's Market Letter - January 24, 1958
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Walston &eo. —.;….;Inc. – – Members New York Stock ExcluLnge NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Sw;hed.,dl OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER January 24, 1958 The overhead supply at 450 and above on the Dow-Jones Industrial average has proved to be a difficult barrier to penetrate, but individual stocks have managed to reach new high territory as witness totals of 20 new highs on Monday, 28 on Tuesday, 40 on both Wednesday and Thursday and 39 on Friday. It is interesting to note the type of stocks that have been reaching new high territory. Among Thursday's 40 new highs were Best Foods Philip Morris First National Stores Pillsbury Mills -'-IiidianapolisPr&-It- – – P-otbmacElect'Y'k Lorillard Standard Brands Pacific Finance U. S. Gypsum All of these stocks are in the groups we have been mentioning since late August as the ones which would show the best relative market action. This still appears to be the pattern. Despite the fact that they have already had some fairly good percentage increase! , the utilities, tobaccos, food chains, foods and finance companies continue to show above average relative strength. Certainly the investor who has concentrated on the light indus- try or consumer goods groups has fared much better than the holder of the heavy industry or capital goods groups. This action may continue until the industry groups con- solidate and gradually form new accumulation patterns. This may take considerable time. For example, it took Bethlehem Steel three years of basing out and reaccumulation betwee 1951 and 1954 in a price range equivalent to 45 and 60 on the old stock before it started the advance to almost 200 before the four-for-one split early in 1957. A lot of the leaders of the 1953-195 7 advance may have to go through similar periods of reaccumulation and digestion before they are ready to take off again on a major advance. In the meantime, there are other opportunities that will gradually present themselves from time to time. — However,. opportunities may be lost-ifthe for capital,,-gains-confines himself to former favorites. In the type of market we anticipate over the next year or so, some rather unusual groups may show excellent market action while the balance of the market slowly consolidates. In last week's letter, I mentioned the finance companies and their favorable technical patterns. I particularly mentioned PACIFIC FINANCE which has advanced to a new high. I am listing other issues below. They are all listed on the New York Stock Exchange. The following stocks are companies concerned principally with the small loan field. Approx. Price Dividend Yield A Fmencan Investment Co BenefiCIal Fmance FamIly Fmance Household FInance Seaboard Finance 17 1/2 20 25 1/2 29 19 1.00 1. 00 (a) 1. 60 1. 20 (b) 1. 00 (c) 5.7 5.0 6.3 4.2 5.2 (a) l'lso 6/100ths of 2.50 preferred m 1957. (b) F Iso 50/0 In stock. (c) P Iso 2 in stock. The following five companies are larger in SIze but are mostly concerned WIth automobile and industnal fmancing, although they do have a certain amount of small loan business. j' pprox. PrIce Dividend YIeld 1 ssoclates Investment 70 2.60 3.7 C.l.T. FinancIal Commercial Credit General Finance PaCIfic Fmance 48 51 21 46 2.40 2.80 1. 00 2.40 5.0 5. 50/0 4.8 5.2 111 of these ten Issues have attractive technical patterns. Thl'\ market letter IS not anr'! undcl no circumstance; 15 to be construed t1-;, an offer to tl1IY aW GeclitiU'Cii rlf.erred to herein The lllinrmntion ('untnlned herein 15 not J'unrnntced liS to accuracy or completeness IInr! the furnlshmg- 1f'h1.r'lfn,I&! 110 hc construed as, n rep! csentn 11111 hy Wal'lton & Co, Inc All c..prCSSlOns of Ollinlon arc to chnnge ,,!thout1P.pWa Blli.l0offilcers, Directors, Stockholders anft thereof, pUlchllSC, find nM h'lvC an lntctCst m the SeCUrltles mentIoned merely as a gcnernl, mi!! mol comment'lr on (In to dllY mllrkct newo- and not as a tomplete nnalY15 Ad(i1t1onnl mCurmntlOn \\ Ith reo-peet to nny securitIes refctreoJ to hClcm WI! t,(, fu, nlhe,\ ur,n rC(lllcst i\ 301

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