Viewing Month: May 1958

Tabell’s Market Letter – May 02, 1958

Tabell’s Market Letter – May 02, 1958

Tabell's Market Letter - May 02, 1958
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NEW YORK Walston &Co. —–inc —– Members New York Stock Exchange SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM CHICAGO TABELL'S MARKET LETTER May 2, 1958 The various averages during the past week all reached new intra-day highs since early October,. The following table is interesting. Average Dow-J one s Industrials Dow-Jones Rails Dow-Jones Utilities Stand. & Poor 500-Stock 1956-57 Hi/ilh 524.37 182.54 75.01 49.74 1957 Low 416.15 94.91 61. 45 38.55 Feb. '58 High 459.77 111. 92 73.10 40 2.60 March '58 Recent High High 457.27 460.56 107.94 113.21 73.66 77.87 -42;75 '–43.85 0/0 Decline From High – 120/0 – 380/0 40/0 120/0 – It can be readily seen from the above table that the utility group has been the best holding since 1956. This average is now selling above the 1956-1957 high while the other averages are still considerably below former peaks. The diverse action of the major groups shown above is even more sharply illustrated if individual groups and issues are used. An industrial investment issue like Union Carbide, for example, is selling 350/0 below its high and 40/0 above its low while American Cyanamid is selling 20/0 below its high and 280/0 above its low. Utilities are selling in new high territory while a rail issue like Union Pacific is selling 29/0 below its high. As I look at the 1500 graphs of individual stocks and various averages that I main- tain, I see no change in the market picture that I have outlined for quite some time. The market in terms of the averages is not going to go very far in either direction. However, that does not tell any where near the entire story. While the Dow-Jones Industrial average may hold in a range between 480 and 420 and the range of between 40 and 45 for a year or more longer, the Index in a ppenty of worthwhile upward moves in the market during the relatively nat As we have mentioned several times before 1 Ie r e market can be roughly divided into fo,r for the past- six months and wIll the stocks whose earnings in 1957 w h above actio fo do over the foreseeable future are a ' 956 and whose earnings in 1958 will probably be better finance, drugs, retail ores d utilities, food chains, tobaccos, The secon cl . of groups that over-discounted their long term potentials at the 1 have now reacted sharply but now appear to have discounted unfavora ments and are in the process of slow re-accumulation. The papers, building s 1es, oils are among the groups that would fit into this category. It is groups of this n ure that should be watched closely and accumulated on minor price declines. While they may not move up immediately, they will probably be among the eventual leaders. The third classification is composed largely of the heavy industry groups that probably will need a considerably longer period of time to re-accumulate and commence their anticipated advance. The fourth group is composed of special situations such as issues I have recom mended in the past such as Bell & Howell and Wils'on & Co. Probably the best course of action for the foreseeable future is to forget about the general market and the course of the various averages. I think there are three rules that could be followed by the individual who is interestedTin-obtaining six.,months market profits over the next year or so. (1) To be neither an all-out bull or an all-out bear. Individual stocks are going to continue to move in both directions regardless of the course of the general market. (2) More money will probably be made in the offbeat undervalued situations than in following the course of the recognized market leaders, most of which will hold in relatively narrow trading areas. For example, the distilling stocks and textiles, which have done little marketwise for a long time, appear to be showing increasingly favorable relative strength. (3) Periods of price weakness when, as and if they occur, should be used to accumulate long term growth equities. The general market is in a trading plateau with the eventual emergence on the upside. The timing of the upside penetration is the only doubtful pOint. 'f'1'iBBLL Thill market letter IS not, and under no Clrcumstnnces IS to be construed as, an offer to sell or a ('untamed hel em lS not guarllnlccd tiS to lIccurncy or completeness nnd the furnlshmj! thereof IS rQf'1,Ijl',.eq to herem The informatIOn Id..UiI 'w Itonstrued a representn. ll'u l,y Wallon & Co. rH'. All expreSSions of opinion are subJcct to chan).!e Without notice WnlSton & Co, Inc. and Officers, Directors, Stockholders and thereof, pUlchasc, sell nnd mny ha\c an Interest In the mentIOned herem Th,s market Ictter IS intended lind preqentcd merely as a genernl, InfO! mnl commentary on dilY to day mllrket news and not as a complete nnnlysis Addltionlll mformntlon With Te;pect to any Securltle9 referred to herem Will be fill nih,,j upon I equest \\.. 301

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Tabell’s Market Letter – May 09, 1958

Tabell’s Market Letter – May 09, 1958

Tabell's Market Letter - May 09, 1958
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r .. .' Wdlston &Co. NEW YORK M embo1'S Now York Stock Exchange SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFices COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM CHICAGO TABELL'S MARKET LETTER May 9, 1958 The various averages reached new high territory for the move during the past week with the Dow-Jones Industrials at 465.14, the Dow-Jones Rails at 115.62 and the Standard & Poor's 500-Stock Index at 44.23. When the technical patterns of the averages and individual stocks are comparee, the pictures, in many instances, are quite different. The averages are approaching the upside objectives outlined by the October-December bases. As I stated at the beginning of the year, the range for the Dow-Jones Industrial average was probably 480-460 on the 1 ,on t!Ie ()wnside. ra!!ge on t Standard & Poor Index was indicated as 45-40. The rail range appears to be 116 'and 95 with a possibility of 126 on the upside, but the higher projection might come at a later date. These ranges are in line with the theory that the market is in a broad accumulation range that will take a considerable time to form. In order to form a base it is necessary to have com- paratively wide swings back and forth in a trading area such as occurred in 1947-1949 and 1951-1953. A comparable trading area for the averages is anticipated for present mer ket pattern. The duration of such a range is problematical. The averages are approaching the upper part of the trading area and some caution appears warranted. In addition, several of my technical indicators are reaching overbought territory and it is probable that, after some further strength, a technical correction might be necessary. The extent of such a correction is not clear as no top patterns have as yet been formed but I would not expecta decline beyond themrmal tech- nical bounds of one-third to two-thirds of the advance from the October lows. This proJection, combined with other indicators, would dip to 445-440 in the Dow-Jones Industrials and about 42 in the Stmdard Would be in- clined to take some trading profits and also r ble ups from holdings i order to build funds for possible buying beli -that, for the longer term, the market is building up a broad ally be penetrated on the 'up'Stde7 ,-c' , term buying opportuniti es. cO 0 The technical pat n 'n i arwsues and groups is not as clear cut as … ;-' little effect on 1 . s and considerable effect on others. I have been stressing the con g as' ues for the past nine months and they still do not appear vulnerable d pit ir rise. In addition, many new groups are begging to build up strong pote patterns and could become new market leaders on advancing phases. I mention d the liquors and textiles last week. The retail stores are be- ginning to show better relative strength along with the rails, particularly the western and southern roads. Another very interesting group IS the oils. The near term action of these groups should be watched very closely. If any new lows are to be reached, they will probably be found in groups that have been showing poor relative strength on the advance such as the chemicals, rubbers, auto and auto equipment and the heavy industry stocks, but even here individual'issues in each group have diverse patterns. BELL &. HOWELL (64 1/2) has shown excellent market action since originally recommended at around 4'Oand has abiiut'reached-ifs-interme'diate term object ive. We are therefore eliminating it from the recommended list for possible rebuying at a lower level. The long term objective is much higher and the stock should be held by long term investors who ignore intermediate term moves. EDMUND W. TABELL WALSTON & CO. INC. Thl' nlarket lctwr is nol anrl under no Clrcumstnnces 10; to loe cOnl,trucri !l.S, an offer to sell or u aohCltatlon to Iouy flny securities referred to herem The mformatlon ('ontnmed herein IS not as to accuracy or completeness dod the thereof IS not, and under no circumstances IS to be construed as, a Tcpresenta. iwn b) \\'alston & Co, Inc All e'lpre'5SlonS of OPimon are subJect to change ..,thout notice Walston & Co., Inc, and Officers, Directors, Stockholders and mr1 mnl thereof, cllmmentary on d,l), to and may have an mterest m ,lay market news and not a' a the ecuntles mentIOned herein ThiS complete analYSIS AdditIOnal mform market letter 15 I atlon WIth 1CSI'ect ntended to any and sccu presented merely IlS ntle, referred to her enmgen.Je!rable, fUI lIP'OlI rel')uest \\ N 301

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Tabell’s Market Letter – May 16, 1958

Tabell’s Market Letter – May 16, 1958

Tabell's Market Letter - May 16, 1958
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NEW YORK Walston &- Co. – – – – – I n c – – – Members New York Stock E,rchange SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST CONNECTEO BY O/ReeT PRIVATe WIRe SYSTEM CHICAGO TABELL'S MARKET LETTER May 16, 1958 Faced with disturbing developments abroad, the stock market declined sharply 0 Wednesday, but recovered some of its losses later in the week. At the intra-day lows of the week, the Dow-Jones Industrials at 453.84 were down over ten points from the recent high of 465.14 and the Standard & Poor's 500-Stock Index was down over a point from the recent high of 44.23 to 42.91. As noted in last week's letter, a technical correction of the advance from the October lows is needed. No definite tops have been formed but a correction could retrace a third to two-thirds of the advance from the October lows. Thi cou1ameaii'adecline to roughly'the 443430-range in-the 42-40,.range on the & Poor 500-Stock Index. I have mentioned several times in my letter that I felt the market, as measured by the averages, was building up a wide accumulation base similar to 1946-1949 and 1951 1953. I believe that the market will, therefore, hold in a wide trading range bounded roughly by 460-480 on the upside and 430-420 on the downside for quite some time. The market is, in my opinion, in the early stages of this trading area. It may continue to hold in such a trading range for as long as two years. The economy probably has about reached its low paint, but it may be quite some time before it again advances sharply. Another factor that indicates a longer consolidation area is that the market is much higher today, in terms of price/earnings ratios, than in either 1949 or 1953. This is particularly true in the case of the high grade blue chip issues. Let us take 1953 as an example. The Dow-Jones Industrials started an advance in September 1953 from 254 that finally culminated in a high of 525 in April 1956. The market started its advance while business was still declining. The Federal of Production was 133 in September 1953 and did not reach its low of 123 u '1 f P954 by which time the Dow-Jones Industrials had advanced to R subsequently reached a high of 147 in late 1956. Thus, a case be ma at the present mar- ..,ket is similar ady.ance in in h . ueyon!. many stocks are greatly overvalued as 't 953 he table below shows \ \ JEarned 1953 Earned Recent 1958-Est. Price PiE Ratio Union Carbide. Goodrich 0 35 13.4 19.4 8.6 2.10 3.10 4.00 59 86 54 28.1 27.7 13.5 These three i s, based on a continuation of the trend of the 1958 first quar- ter, will earn abou e same amount as in 1953 yet General Electric, for example, is selling at 58 7/8 today as compared with an average price of 26 in 1953 and at 28 times earnings as compared with 13.4 times earnings in 1953. This, fortunately, is not true of the entire market. Some of the consumer goods type issues that we have been recommending over the past nine months compare favorably with 1953 ratios First Nat'l Stores National Dairy Philip Morris' Zenith Radio Earned 1953 4.17 2.32 5.01 6.31 Aver. Price 1953 47 31 48 37 PiE R-at-io 11. 3 13.4 6 5.9 Earned 1958-Est. 5.75 3.40 5.25 ;;. 10.00 Recent Price 64 45 54 w-75 PiE Ratio 11.1 13.2 10.3' 7.5 – It will be seen that these three consumer goods issues and special situations are still modestly priced. In terms of the general market, it appears that a great many issues are too high to support a further price rise at this point. A Etnp carr.ir.gs inCrEase is needed for the market to move above the 460-480 level and that does not appear to be a near term possibility. Therefore, a long continuation of the trading range is anticipated as probably earnings have about reached their lows. In the meantime, issues with still advancing earnings and issues still in declining trends, but with a chance of a nearby upward trend will still present gcod possibilities of price appreciation. I will endEavor to point oat issaes of this tYge in subsequent ietteI S. ThiS marhet letwr IS not. Ilnd under no circumstances 1'1 to be constrllcrJ IlS atl piTer to ,;cll or a 90hcltatlon to buy nny SCCllrlties refcrred to herem 'l'hc mformn.tlon cnnt(lllled hel em IS not Itunrlltltced Il'l to nCcuracy or and the funllshln)! p'IJIl Ml(htlFI() crqmJ'\l1tbt!1l1'l IT to be construed JlII, II rcprcsenta- tlUn by Wal'lton & Co, Inc All CXprelSlono; of oPInion nrc subJect to ch,llIgc &,vGo. Dlrcctors, Stockholders find Eml,luy'C') thelCQf, purchnbe, ell and may ha\e an mtreo;t In the IH!CUrltlcs mentIOned ht\1'f11l\ ….. J-fttcn;i-tl.tjIQd pre-entcd merely as a general. mf(lrhlllJ ommcntnry on day to riny mark(!t nev-s and not ns n complete analYSIS AdltlUon\W J,c,llonhes referred to herein will bc fUI upon fcqlle'll. \\-; JOI

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Tabell’s Market Letter – May 23, 1958

Tabell’s Market Letter – May 23, 1958

Tabell's Market Letter - May 23, 1958
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Walston &Co. —-Inc –..;;……;… Members New YO'l'k Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM CHICAGO TABEll'S MARKET lETTER May 23, 1958 Perhaps spurred on by a jittery short interest, the market advanced this week, reaching highs of 463.32 on the Dow-Jones Industrial Average and 44.06 on the Standard & Poor's 500- Stock Index. This compared with 1958 highs of465.14 and 44 As mentioned before in these letters, the technical obJectives for the two averages ar 460-480 and 44-45. At current levels the market is approaching these objectives an further strength should be used to lighten unfavorable holdings and develop cash in order to repurchase more favorabl, situated groups on price weakness later on in the summer. – – – … I – – –.., …. .. -.,.- – – – 0' In last weeks letter it was mentioned that the marKet was, in all probability, building up a trading range base similar to the trading range in which the market held in 1951-1953. It was also pointed out, however, that there were a number of dissimilarities between todays market and that one, notably the considerably higher price-earnings ratio accorded most growth issues. In this connection, the following table is of interest. The theory of growth stock investment is that a growth company will continue to show rising earnings from cycle to cycle, that is from the top of one business boom to the top of the next. We have therefore calculated below the advance in earnings shown by the major companies in each investment group from each company s peak year in the 1951-1953 period, to its peak year of the 1955-1957 period. Next to that we have calculated the average percentage rise of each stock in the grou from its 1951-1953 low to the current price. Rise in earnings o 1951-3 to 1955-7 4 Aluminums 60 5 Chemicals 41 . ; 5 Electrical Equipments 5 Foods 'W c0 0 '\-. 5 Food Chains 3 Oil Producers 0,\5 164 179 5 Oil Refiners 87 4 International Oils 44 164 5 Papers 32 182 3- Soft Drinks 42 93 5 Steel I 48 183 4 Tires 20 227 5 Tobaccos 46 79 The table points up some interesting facts. First of all, it can be seen that the groups which showed the largest rise in earnings, electrical equipment and aluminums, have risen in price to an extent approximately three times the rate of their earnings rise. The group which had the second poorest earnings gain over the period, the tire companies, has actually shown the second largest rate of appreciation. c Perhaps mostcinteresting however, Js the fact that such a; foods, soft drinks and tobaccos have shown good earnings gains while advancing less than most of the other stocks included in the survey. It is to be noted that all the above stocks have advanced in price much more tha their earnings would appear to justify. This can be attributed however, to the acutely depressed level of prices which prevailed throughout the 1951-1953 period. However, the study also serves to point out that this cheapness no longer exists and that any further advance must be justified by a statistically low price plus the prospe t of improving earnings. For this reason this letter continues to recommend the so- called defensive issues where growth possibilities seem to be combined with relativ I low prices. ,ntFh1U.ELA W/XJawgStt,er is not. nnd under flO circumstances 18 to be construed ae, ('untfllned l'ierem is not Jluarnntt'cd as to nccurnc) or completeness and the tICIn by Wnlston &; Co, Inc. All expreSSIons of OPInion nre subJcct to an offer to sell or n BohcitntlOn to buy any secudheEEDlriljNarlzn thereof IS not. and under wlthout notH'(' Walston & no circumstances Co, Inc, and l tt'6e consfiUed SatlslC, -'1kl hrte1p'rdem'letaitan- m hlllplyel's thereof, purcha;e. sl'll and mny an mterest m the securItIes mentIOned herein, ThiS market letter IS 'lr'ltetLeral, inf, nJ.l\ C'()mmcntl\ry on day to day market news and not ns a completl' nnalyllls AddItional Infol mahon With respect to any Beculitiell referred to herem fUl UllOn rCfluest

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Tabell’s Market Letter – May 29, 1958

Tabell’s Market Letter – May 29, 1958

Tabell's Market Letter - May 29, 1958
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NEW YORK Walston &Co. Inc. Membe,'s New York Stock Exchange SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFices COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM CHICAGO TABELL'S MARKET LETTER May 29, 1958 The stock market was in a pre-holiday mood for most of the abbreviated week and little progress was made in either direction. With the averages near the upper part of the anticipated broad trading area and second and third quarter earnings reports expected to furnish no new bullish ammunition, it is probable that the general market will be in either a consolidating area or a minor declining phase for the most of the summer months with the large short position furnishing the bulk of the buying support. -,IL this.analysis is the not g..!E!g .very far in either direction, probably the wiser course is to-ignore the averages and to concentrate on individual issues with improving earnings prospects. This I have attempted to do in my recommended list which was last reviewed in its entirety in my letter of April 25th. A very brief summary based largely on technical market action follows. American Can (48) continues to show above average relative strength action. First quarter earnings were steady at 41 as compared to 43 in 1957. Has held in the 49-38 range since 1954 and I expect the eventual emergence of this trading area will be on the upside. Anchor Hocking Glass (52) also shows a steady earnings pattern as contrasted with the average issue, with a first quarter report of 1.20 vs 1. 21. The stock has broken out on the upside of the 1954-1957 range of 32-42, and has a long term potential considerably above present levels. Carolina Power and Light (30) is our representative in the strong growth utility group. It appears to be in a slow longer term uptrend to the 40-45 level. iner Corp (20) showed first quarter earnings of 31 as compared with 36 in \ biJ)ity to break out on the upside of the 17-20 area in which it has I e )ehl- Vffi7 would be constructive technically. Family Finance (30) a g;wit small loan issues is showing above average action. It upside of a long trading has an upside-potential- . or– onger term. . First- National– Stores (64) has recently reached r i but still has a nearer term obJective of 70-75 and a 85. Hoffman Electronics (28) is in my opinion, one of th.!f mor a .e issues. 1958 earnings should at least equal s program and alert management should result in a sharply ical pattern continues attractive. International Minerals & e9) wed a dissapointing first quarter due to poor weather conditions and nine m s earnings for the period ended March 31st were only 95 as compared with .69 in the comparable nine months of 1957. However. the improving farm price pattern should result in a rising trend for the company and the excellent potential technical pattern would indicate much higher levels in the event of an earnings improvement. Lily Tulip Cup (76) in line with most container compan e is continuing to show above average action and has a long term potential of over 100 National Gypsum (47) showed a dip in earnings for the first quarter but this trend should be reversed shortly. Technical action is good with a recent penetration of the 1957 high. Continue to hold and add on weakness. Pan American World Airways (1'5) has been slow but relative strength action remains steady. Would continue to hold in anticipation of an expected rate increase later in the year. Phillip Morris (52) technical good, terrrl. objective 70-75. Raytheon Corp (28) has shown a sharp price advance since originally recommended but would continue to hold. Intermediate term potential is 33. United Biscuit (31) Despite the sharp first quarter earnings decline, the stock appears cheap based on the future potential. Would rate it Buy-Hold. Wilson & Co. (21) has shown excellent action since originally recommended at around 14. May need some consolidation but a much higher potential is indicated over the longer term. Zenith Radio (79) reached a new high last week. With a possible earnings potential of 10 for 1958, the stock still appears attractive. On any weakness during the summer months, I expect to enlarge the above recommended list considerabJr mnrkd letter not, lind under no Cllcumsbmces IS to be construed liS, nn offer to !'lell or 11 sohcltntlOn to bu) mlV\il'tdlliU Werlill to (unt!lincd hcn'lll IS nut gunrnnteed as to aecut ney or completeness nnd the furnishing thereof IS not, nnd under to b'e /\,\oWPfI & Co Inc All expressIOns of OPinIOn arc subject to Without notice Walston & Co TWJA .Tnlldr-8ff'CICfS. Ilna .. ,f, sell lind may hnve an Interest In the seeurltu's mentIOned herem ThIS market .,;onoral. nfurronl commentnr)' on tiny to d1)' market news and not as n complete onalysis AddltlOnol mformatlOn With respect to nny secuntlcs referred to herem Will be fUI HIIOl rCfluest \\;.. J01

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