Tabell’s Market Letter – July 03, 1958

NEW YORK Walston &Co. Inc. Members New York Stock Excha.nge SAN FRANCISCO LOS ANGELES PHILADELPHIA OffiCES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM CHICAGO TABELL'S MARKET LETTER July 3, 1958 The averages have again rallied back into the heavy overhead supply area at 480-520 in the Dow-Jones Industrials and 45-49 in the Standard & Poor's 500-Stock Index. The highs for the week were 482.26 and 45.53 as compared with the June ,I \ 17th highs of 482.11 and 45.57. I am of the opinion that the general market averages will not push through this heavy supply of stock on the first attempt and some backing away is needed in order to enlarge the base and build up sufficient momentum to ab- sorb the overhead offerings. This may take considerable time and result in a continued broad trading area in the averages. ''If the'market-is to 'continuein- a broad trading'area 'for the-4'oreseeabl-efuture;-' -. the wise course is to ignore the averages as much as possible and concentrate on in- dividual issues with a combination of an attractive fundamental background and a po- tentially constructive technical pattern. The issues below seem to meet these quali- fications and probably will be added to the recommended list at what I consider the proper timing from a technical viewpoint. AMERICAN DISTILLING (34 ) is one of the largest of the independent distillers. Distilling stocks, in general, have shown improved relative strength of late as investors have recognized the fact that population figures favor growth in liquor consumption over the next decade. American Distilling has one of the best technical patterns in the group with an upside obj ective of 45-47 and support at 29-26, just under the current market. The company's emphasis on popular priced brands has enabled it to increase sales during the current recession, and earnings for the six months ended March 31st were 1. 85 a share vs. 1. 63 in the Earn- ings for the fiscal year to end this September ih – 4.00 range, and the current 1.60 dividend could be increased tl n t ure. The stock is selling well below the indicated book value of 4 a sha . -F-EDERAL…P-AP-ER BOAR boxboard, converting around one-h t . .9f folding 0 cartons. Acquisitions in recent years have benefited the product line. The lat t of t s integration and broadening of the q sitt.)tts is Federal Glass Company, a producer of low-priced hou e I r. hough earnings will probably be off slightly from the pro for 9 ,the 2.00 dividend is well covered and affords an excellent yield. St s ca ,the stock is selling at around nine times average earn- ings for the past five s and future growth of convenience packaging should provide for increase in ear gs over the longer term. The stock has an upside objective of 50, with strong support just under current levels. GIMBEL (29) has been engaged in an aggressive program of suburban store expansion and modernization with additions to property in 1957 totaling over 7 million. Suburban stores were opened in Bayshore, Long Island; Upper Darby, Pennsylvania; North Hills Shopping Center, Pittsburgh; Springfield, New Jersey and Stamford, Connecticut. A shopping center outlet in Milwaukee is scheduled to be opened shortly. The expansion of facilities has caused pressure on profit margins and earnings for the second quarter were down to 26' per share. A moderate decline in full-year earnings, perhaps to 3.25 from 3.69, may be in prospect, but the enlarged sales base should produce ….better earnings to come. The 1. 60 .dividend, which provides a 5 .5l'ayield, does not ap—pear in jeopardy and the stock has an excellent technical pattern with a possible upside objective of 43-45. PARAMOUNT PICTURES (41) has appeal as a special situation based on the eventual liquiClation of its surplus assets, for the most part old movies together with some real estate. The company has already sold its pre-1948 film library for 50 millio payable through 1973. The first payment on this sale amounted to 3.69 per share after tax. Paramount will ultimately receive close to 20 per share from this source, and it can be assumed that post-1948 films are worth equally as much, if not more. Meanwhile, the 2.00 dividend is covered by operating earnings which should be up in 1958 from the 2.47 shown in 1957. The stock has a possible upside objective of 60, with good sup- pOI t at the 36-35 level. E.nMTT'U TH 'T'A '0 T ThlK mnrkellc\tcr IS not, and under no clrcumstnnees IS to he eonstrued as, an offer to 1LIlW.l .. to herem The informnl1on is not guaranteed os to accuracy or completeness and the furmshmg tbl;l;C\j;f is IS to be construed us, n rcprcsenta- .I.(jnn hyWiiljton & Co. Inc All e'CpresslOns of OPInion arc suh)!!'Ct to change )o,mployees thereof, ;ell and may nn Interest In the securities mentlOncd herem r an IS murke 0c Qfficers, Dlrectora. Stockholders and let r IS m en eJ and prC'lcnted merely nil n general, mrurmnl cnmmentllry on rlny to day mnrket ne\\-s and nnt as a complete nnalys!''' Additional mformntu.n With respect to any secunbes referred to herem \\-111 be rm upon rCluCl \\ 101 , – – –,……