Viewing Month: September 1958

Tabell’s Market Letter – September 05, 1958

Tabell’s Market Letter – September 05, 1958

Tabell's Market Letter - September 05, 1958
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—— – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – — Walston &Co. Inc Members New yo,-k Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM CHICAGO TAIELL'S MARKET LETTER September 5, 1958 The market still remains in a trading shelf. The Dow-Jones Industrials managed to better the previous August intra-day high of 514.44 by a small amount to reach 516.59 on Thursday, but failed to follow through. Friday's close was512.77. The rail average just about reached its comparable high of 134.48 at 134.46 on Thursday. Friday's close was 132.43. Various other averages just about reached their previous highs. By all accepted statistical yardsticks the stock market is high. Based on earnings for the 12 months ended June 30th, the D-J Industrials are selling at 17.4 times earnings,and based on estimated earnings for the 12 months ending Sept. 30th, the average is selling at 18 .9.times earnings.This)s the highest ,p./ E ratio ,the pJE ratio reached roughly, 21 times earnings. It compares also with 14.6 times earnings at the 1956 high, and 15.2 times earnings at the 1957 high. Also, the bond-stock yield spread of 0.20 is the smallest since mid-November, 1936. On Central Value, which we have mentioned several times in this letter, the market is also high. Based on 27 earnings on the D-J. Industrials for 1958,and capitalizing these earnings at twice the yield of AAA bonds of 3.8 shows a central or normal value of 387. Allowing for 20'70 above normal in a period of high investor confidence works out to 465. At 513, the D-J Industrials are over valued on Ben Graham's Central Value Theory. However, when we look at the market from a technical viewpoint the picture does not seem particularly ominous. Breadth-of-the market action on volume, for example, conti- nues to show no signs of deterioration. The 10-week moving total of upside volume is at the highest level since early 1955, and the 10-week downside volume is at the lows of the last 45 months. This is also true on the longer term 25-week moving totals. In fact, on this longer term graph the downside volume is the lowest s e 't)hen the 1953 to 1956 bull market was in its early stages. It is only on th)hiffiov n t vances and de- clines that some slight signs of deterioration – es' to note that despite 0the rise in the averages, the market has become its high he 10-week moving is,sues cmg smce that tlme. 1I;1so, the num!r' reached its low at the same time;, lg S on the lO-week movmg basls . c8t number of declining stocks has been showing an increase. This the longer term 25-week moving totals, but the trend is h ,t' type of action can continue for quite some time before it results' a 1 r situation. On the pOint an ' r h there are yet no signs of any great vulnerability. Quite a few groups have re he eir immediate upside objectives, but there are no really dangerous top format' formed as yet. The same thing is true of the point and figure charts of the various averages. In most cases they have reached upside objectives, or are very close to it. Also, the averages and some individual stocks are in areas of heavy supply, as is evidenced by the action of the past month. It appears, as mentioned in re- cent letters, that the market may be forming a broad accumulation area very similar to 1946 to 1949,with the major part of the work being done in an area bounded roughly by 525 and 460. I believe that the opinion held by many investors and analysts that the present advance from the October lows is merely a rally in a bear market must be abandoned. Breadth and scope of the buying has been too substantial to be written off as a mere speculative phase. However, I do not believe that this is the start ofa major advance.On the averages and in individual groups and stocks, there appears to be more work needed to build up a patternsimilar to the1946 to 1949 accumulation range. This should result in considerable backing and filling in an area bounded roughly by the aforementioned 525 to 460. On a short term basis, the market appears overbought. It is possible that a buy- ing climax might occur that could carry the market back to the 1956 highs, or even slight- ly higher, but it is difficult to read much beyond that. On the other hand, a decline below 500 would probably indicate a technical correction to at least the 485-480 level. That is the first support pOint. The second downside resistance level would be around 460 in the averages. The prospects, therefore, appear to be that the market, as measured by the averages is probably reaching a temporary top but that the overall picture is one of strength and that any declines will do not much more than retrace a third to a half of the advance from the Oct. lows. Obviously, while this applies to the averages, it will not apply to individual groups and issues. Some will show above average action and others below i;l,g.gc P'1.rtlTt'''ttt''Wa'Mt\')\-I; …,.. ..''f'''''''''' Qn.cQtd wdi'lfi.d1.la.l s, tllna!luJatedI7M('0mb, lslWo..h'm.mado'.r'e0fo,ipm'ffi..CnCa', 'ii1n.';tai'a and Officers, Directors. Stockholders and Empluyees thereof. purchase sell and may hnve nn mtere'lt in the sccurilles mentioned herem ThiS market ctter IS lIlfm mnl commentary on dny to market Ile\\'l! not as a complete nnaisls Addlt1(lnai InfOI matton With respect rr.d J fu! llI..hci III)On request 0

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Tabell’s Market Letter – September 12, 1958

Tabell’s Market Letter – September 12, 1958

Tabell's Market Letter - September 12, 1958
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Wdlston &Co. Inc, – – – – – -' Members New YOTk Stock EXchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM CHICAGO TABELL'S MARKET LETTER September 12, 1958 The market continues to forge merrily ahead, and this week it came close to rea ing newall-time high ground. The intra-week high of 523.57 on the Dow-Jones Industria Average came close to penetrating the triple top at 524.37, 523.33 and 523.11 formed in June 1956, August 1956, and July 1957. As has been pointed out regularly by this letter, the market is high. It is high by all statistical yardsticks and this very level makes it vul nerable. As was pOinted out last week, earnings are being capitalized at a record rate, and the spread between stock and bond yields is constantly narrowing. An interesting indi cation of this is that Sears Roebuck last week sold a major debenture issue which was priced to yield considerably more than the company's common stock. There is no particu lar rule that says that stocKS must yield more than bonds. Indeed,-there are a number of reasons why they can in many cases yield less than senior securities; among them, inflation and the prospect of increasing income over a period of time. One fact worth noting though, is that many institutions, particularly those with dollar obligations, such as insurance companies, are predominantly yield-oriented. There is, therefore, little reaso to expect that buying from this source will provide a further stimulus to equity prices. The high level of the averages, however, should not deter the investor from see ing value in individual situations. During the whole period from October 1957 to date, while the Dow average was moving ahead some hundred points, a great number of stocks have done little or nothing. Many of the international oils, for example, fall into this class. One of the largest, GULF OIL, has held in a relatively modest trading range between 119 and 101 and, at current levels, is selling only slightly above its two-year low. Ostensibly, this is due to nervousness over the and a fear that Gulf's extensive holdings in the Far East may be expropr a e het-wise disturbed. A hard IO,ok at the economic facts of life in the ,e I son to fear such happenmgs. Cruele oil by itself is worthless. t'o–gj, 'value to the owners, i. e., the Middle East kingdoms, it is well to remember the fOiWS' – thiS connection, Wo roved by the Iranian debacle of 1951, only the international oil com n h e to refine and transport oil, (2) Around half the refi 'n as rude takes place outside of the Middle East, and the Middle East c t e ly equipped to build refineries. (3) The only natura volume market for ' e rude is in Western Europe where marketing facilities are largely controlle b international oil companies. It would thus seem that, while some rearrangemen the profit s p lit may take place, it is inconceivable that the international companies could be .denied access to Middle East oil for any length of time. Granting the above premises, Gulf Oil appears fairly valued at current levels. Estimated earnings of 8.50 – 9.00 a share for 1958 give the stock a price earnings ratio of around 13. Actual earnings,however, do not give a true picture of Gulf's potential. Depreciation and depletion charges generally run about equal to after-tax earnings and the small pay-out ratio means that a large amount of cash is plowed back annually, thus, sharply increaSing the net worth of the company. In this connection it is interesting to note that Gulf has managed to average better than 25 cash earnings on its net worth over the past five years. Thus, while earnings will be off for 1958,.there is no reason not to expect longer term growth to continue. Since the stock has advanced little in the recent bull market, it is strongly possible that the trading shelf in which it has held constitutes an accumula;tion area. In this connection an upside breakout of the 101-119 range would indicate a,n upside ob- jective of 150-170. It would appear as more investors realize that East diffi- culties may be largely transitory that this upside breakout could well take;place and the stock is being added to our recommended list for purchase around current levels in long term investment accounts. \ EDMUND W. TABELL AWTamb WALSTON & CO. INC. , ThiS mill k'l iettlr IS 110t and under no CIrcumstances to be construed as, nn offer to sdl or n soLICitatIOn to buy any securlties referred to herem The informntlOn 'ntlllneol hf'lein IS lIot /.!unrnnteed n.' to accuracy or completeness and the furnishing thereof IS not, and under no Clrcumst.mceg IS to be construed as. a rePresenta- tIOn hy \\nlstol\ & Co. Inc All expre;lOns of opinIon nre subject to ch.lnge Without notlf'C \\'alston & Co. Inc. and Officers, Dutclnrs. Stockholders and lmllluyees theleof. pUlchi\;c, ;cll and may have an interest In the securltlC'l mentIOned hereIn ThIS mark..t letter IS Intended and IJresenled merely as n general. 1I1fllrmni (lmmentm y on dny to mnrket ne,,'! and not as a complete nnnly.!lIs AddItIOnal InfOI mahon lth re-pcct to any secUllhes rUel red to herein Will be fill upon reflu(';t \ \\-; 301 \ \

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Tabell’s Market Letter – September 19, 1958

Tabell’s Market Letter – September 19, 1958

Tabell's Market Letter - September 19, 1958
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-….. NEW YORK Wdlston &Co. Inc Membe1'S Ne,u Y01'k Stock El'clwrlge SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM CHICAGO TABELL'S MARKET LETTER September 19, 1958 Bullish sentiment continues to grow and the market pushes on to new highs. The intr. week high of527. 74 on the Dow-Jones Industrial average pushed this average into new alltime high territory. The Standard & Poor 500 -Stock Index at an intra-week high of 49.71 i flirting with its all-time high of 49. 74. Meanwhile, the pundits continue to argue about market action. The bears point out that the market, based on current earnings and dividends, is at levels reminiscent of pre vious major tops. The bulls, on the other hand, point to indications of continued inflation and a new-business can -be expected,to increase earnings and carry the marke to new highs. Whichever school of thought eventually proves to be correct, it would seem possible to strike a happy medium by purchasing stocks which are still fairly valued on a historica basis and which are in a position to participate in any future business boom. There are, it would appear, a number of such opportunities available in today's stock market. A large number of these opportunities are to be found in industries which will benefi from a maJor change in consumer spending patternEl, which now appears to be taking placE. This change is, basically, away from maJor appliances, automobiles and consumer durabl and toward soft goods and other semi-luxury items. The signs are beginning to appear th t the consumer is turning away from the powerful automobile as a status symbol and is now beginning to spend his money on such items as clothes, cosmetics, soft drinks, alcoholic beverages, airline trips, and other such goods. This change is not yet well defined, but enough economic barometers point in this direction to make th e investor sit up and take noticeCompanies that will benefit from this trend have ngglectejbytheinvest ing public over the past decade. They include the s e, m of which have bro- ken out of long accumulation bases and from a techn c poin 0 'ew appear headed for mllh..higher l;e;e)s. ist E'a willLse! ne,aI1-time and that total 1958 volume, despite reach new highs. Further expansio 's w-d by the recession, could well e or 959, and, on improving margins, earnings could increase !!ft33 1/2) on our recommended list, this week posted a the public for ma a ha a upside objective of 43-45. Also neglected by e hing companies, both in the manufacturing and retail field. HAR 0;; MARX (31), a leading manufacturer of men's cloth- ing, provides a bett t an yield on a dividend earned better than twice over, based on ten-year average e gs. Its pre-eminent position in the clothing field should as- sure participation in ny growth in clothing expenditures. The stock has an upside ob- jective of 55. BOND STORES (19 5/8) a leading retailer of men's clothing, is in the po- sition with a well covered dividend providing a generous yield. Upside objective here is 30, followed by higher levels. Despite the recent flurry caused by the new Federal Excise Tax law, distilling shares still have attraction and population figures indicate that consumption of alcoholic beverages is probably just beginning an uptrend. AMERICAN DISTILLING (34 3/4) which is in our recommended list, appears attractive with an upside objective of 40 fol- lowed by a possible 67. An uptrend has already been confirmed in soft drink consump- tion and both CANADA DRY (18 1/8) WIth an upside obJective of 29, and COCA COLA (1141/2) with an upside obJective of 160; have merit. – — – The list could be extended into many other fields. It would include many airlines, finance companies, cosmetic and toiletry producers, and others. Since most of these stocks have done nothing marketwise for many years, the upside potentials inherent in the accumulation bases formed are enormous. If present signs are correct, the Ameri- can consumer, exercising his free choice in the marketplace, may reward the patient investor in these stocks. AWTbf EDMUND W. TABELL WALSTON & CO. INC. Thb IHark(!llcttCT 15 not, nnd under no 15 to be construed as, an offer to or n soliCitation to buy nil) ;ccuntles refel red to herem The mformatlon (untamf'd herem IS not J!U1lranteed as to accuracy or completeness and the fUI nlshlflJ! thereof IS not. and under no cIrcumstances IS to be eonstrued os. a representa- tum lIy Yo'iliston &. Co, Inc All expressIons of OI)nIOn ore subJect to chonge WIthout nollce Walston & Co. Inc., and OffIcers, DIrectors, Stockholdcrs and lmpluet's thereof, sell and moy have an mterest In the mentIOned herem ThiS market letter IS Intended and presented merely os II. general, Illrul'mai cnmmentary on day to day market news 81ld not as a complete analYSIS AddItional information \Hth respect to ony securItIes referred to herem Will bf! fUl m ..h,cd IIPOII ref')uest \\ 3Dl

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Tabell’s Market Letter – September 26, 1958

Tabell’s Market Letter – September 26, 1958

Tabell's Market Letter - September 26, 1958
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, —- Walston &Co. Inc M cmbas New YOk Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER September 26, 1958 Volume of trading was heavy during the past week with considerable churning of prices back and forth without too much upward progress except in indiv1dual issues. The Industrial average reached a new intra-day high of529.59,just a shade above the previous week's high of 530.68. The Rails did relatively better with a high of 143.41 compared with 140.59 in the previous week. It is quite obvious that after six months 9f almost uninterrupted advance, the market somewhere along the line is going to witness a technical correction of greater proportions than any witnessed since April. Just when and where it will happen is not .. It could occur from somewhere around present levels. On my technical work it is rather difficult to read the averages much higher than about 540-530 on the Dow-Jones Indus- trials,and about 144 on the Dow-Jones Rails,without an intervening correction. Standard Poor's Industrial Index has an objective of 531/2. Friday's close was53.15.However, trying to mastermind the general market has not been a very rewarding endeavor. It has been much more rewarding to attempt to interpret the market action of individual issues. Below is a resume of the issues in my recommended list. One of the more spectacular performers has been ZENITH RADIO (119 1/2) Recommended at the equivalent of 60 on the present stock about a year ago, Zenith has advanced over 100 and reached a high of 134 7/8 during the past week. The long term objective is 140 after which, under normal technical action, a long conSOlidating period might occur. Would take profits on further strength in the 120-140 zone. I continue to I ike the radiO-TV group and suggest a look at MAGNA VO 0 stock has held in the broad 29-44 range for over three years and be n a e breakout. HOFFMAN ELECTRONICS (29) ',is also on my from 22, but suggest continued retention and .partment store stocks have shown 'st. as moved up . min rice dips. The de- ahlW'n my selection on the d.. .35 . I continue to like this stock and the g!),eX ,and would add to holdings during periods of market 1 1 my choice has been PAN AMERICAN- WORLD AIRWAYS (20 re cli d a new high at 203/4 on Fnday. Would continue to hold t n . mcrease in rates is probable near the turn of the year. The bui p continues to show above average action. On my recommended list is A L GYPSUM (55 1/4). The building group, aided by favor- able new bU11ding star should work higher. I also like FLINTKOTE (48 3/4) and would buy it in the 4 -45 range. I believe that the container group has excellent long term prospects. This is evidenced by the fact that four container stocks are on my recommended list. All four show nice profits, but continued retention is advised. One is ANCHOR HOCKING GLASS (54) in the glass container field, one other, AMERICAN CAN (49 1/8) in the tin can division, and the other two are mainly papers. They are CONTAINER CORP. (25 1/8) and LILY TULIP CUP (85 1/2). The fertilizer group also san . upside potential and I continue to like INTERNATIONAL MINERALS & CHEMICAL (31 1/4). This stock has a very substantial upside potential and not too much downside risk from a technical viewpoint. The finance group has favorable technical rns and most stocks in the group have attractive yields. I continue to like FAMILY ANCE (28 1/2), with a yield of 5 1/2,,/0. In the baking group my selection, UNITED BISCUIT (30 1/4) has'been a-c-dud so fat continue to'bepatient. – The IIi eat king group has been showing above average action, but the best stock in my opinion WILSON & CO. (27 1/8). Despite its rise from a recommended level of 15, I believe still has an interesting upside potential. A recent Hddition to the list m the inter- tional oil group is GULF OIL(116 3/8). The stock is not too far away from its two- ear low and has held in the narrow 101-119 range for almost mne months. An upside enetration would be very encouraging technically. In the tobacco group, I like MORRIS (54 1/4). The upside potential 1S sizeable and the Y1eld 1S an attract- EDMUND W. TABELL V/ILS'f'OPJ & CO. litC. Thl I1\nrkct leUer IS not and under no CITcum;tancC'I IS to be construed as, an offer to sell or a sohcltnllOn to huy an) securities referred to hereIn The mformntlOn (llntntn'd herem not Juornntced n; to accurllCY or completeness and the fUTnJ;hmg thereof IS not, and under no CIrcumstances IS to be construed as, n rcprcsenln- tUJI! ii \\ ,00…tOIl l. Co Inc All c).prCSSlOns of opInion nr subject to change notice, Walston & Co. Inc. nnn Officers, Directors. Stockholders lind !'lI1pJy,t.' thereof, 'lcll and have nn ll1t(l(t In the securitIes mentIoned helcm fhl'; mllTkcl letter HI Intended and pre;ente! merely liS n IUrI'rn,1l ('Illm('ntnl) on d \) to lias m.lrkeot nc\,.'5 lind not 11'1 n complete nnniVl'as Addltlonni mformntlOn With reSllect to any seCUrities referred to hClcln Joi rlll 111-111'1 ll\!(ll\ 1Cfjucst

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