Tabell’s Market Letter – March 26, 1959

Walston &Co. Inc —….;;- Members New York Stock Exchange NEW YORK SAN FRANCISCC LOS ANGELES PHILADELPHIA CHICAGO OFFices COAST TO COAST AND ABROAD TABEL1.'S MARKET LETTER March 26, 1959 The general market drifted lower during most of the week with the Dow-Jones Industrials, at 606.58, off 3.79 points from the previous Friday's close. Volume of trad n on the New York Stock Exchange declined along with the dip in the price level. The real scene of activity was the American Stock Exchange where the volume was almost equal to that of the Big Board. Many stocks of extremely questionable quality hav been having a field day on the American Stock Exchange in recent weeks. This activity reached a climax in the past fortnight and on Thursday, these stocks took a severe beatin and suffered drastic price declines both in number of points and percentagewise. This sho have come as no great surprise to anyone. It was Just a matter of when it was going to ha – pen ana'hoW-ridicuJously lilgli someof'fneseissues were ine-vitab1e decline occurred. In a sense, the market situatlOn today is quite similar to that of March, 1955. At that time the market had been advancing for eighteen months and had moved from 255 in the Dow-Jones Industrials to over 420. The advance had everyone worried, including Washington, and Congress conducted the Fulbright mquiry. There were sharp advances in issues of questionable quality with the only difference from today being that the names were different ones — like Bellanca Aircraft, United Dye Works, and others. In March of 1955, issues of this type declined sharply and continued to drift lower for two years. The general market declined mildly, in sympathy, from 420 to 385 and then continued to advance until April, 1956 when the industrial average reached 525. The technical pattern is quite similar today. Most stocks have only small top pat- terns,if any. The Industrial average has a strong support level at 600 to 580 and the nical pattern suggests a dip into the support zone. There terioration in the great majority of issues. \W of longer term de- While a great number of issues appear to 0 ist' y priced today, ther are a number of good values shll around. NORTHR FAORP 1/4) is a case in pOint. Earnings for the six months ended January er ced last week at 1. 97 a share, a-gainst -108-2 the-previous t, -Resea-rch -Department has' – just issued an excellent hIWC electronic and missile stocks 'Il! t t points out that in their search for be overlooking Northrop which derives nearly 700/0 of e r 'cs, missiles and related products, and ment expects thi companies west of t 1 ase. Northrop ranks among the largest electronics is s 1 with electronic sales alone higher than such substan- tial enterprises as A pe eckman Instruments, Consolidated Electrodynamics, and Hoffman Electronics espite these factors, the stock is selling at only 9.4 times earmngs of 4.29 for the fiscal year ended July 31, 1958. Northrop is on my recommend ed list. Another issue on my recommended list that appears undervalued is WILSON & C (37) despite its sharp advance from a recommended level of 15 to 38. Earmngs for the flscal year ended October 31st were 3.10 a share, but are estimated at a possible 4.50 a share for the 1959 flscal period. Improved operating methods, packaging and fication have madette meat packing much less cyclical than in the past. Another company showing an improving picture is tTORTHWEST AIRLINES (40 3/4). February revenues set an all-time record for the month. Its new route from Chicago to Florida has largely eliminated the I.\sual large seasonal losses in the winter months. Estimates of 1959 earn- ings incicate 5.00 a share before possible capital gains. Some of the railroad earnings for the first two months of 1959 make interesting comparisons with a year ago. Atchison, Topeka & Santa Fe earned 21 vs. 11, Southern Pacific 1.20 vs. 84, and Vv'estern Pacific 1.26 VS. 49. The rail average has been resting in the 168-157 area since mid-January and has built up an excellent potential base. EDMUND W. TAB ELL WALSTON & CO. INC. ThiS mnrket letter IS not., und under no IS to be construed DS, nn offer to sell or n sOhcltatlOn to buy any seeuTltJes referred to herem The mformation contnmcd herem m)t J.!;unranteed as to nccurucy or completeness and the thereof lS not, and under no clt'c\zmstanre; 111 to he ('ons1rued as, n rePrcsenta- tum bl- 'nlston &. Cn. Inr. All e).presSlOns of OIHIllon arc subJect to Without notICe Walston & Co. Inc. nnd Officers. D1rectors. StockhOldQrs and Empin)oees thereof purchn!e sell nnd may hae an Interest In the flccurltle9 mentIOned herem Thlq market letter IS Intended and presented merely as a general. mformnl eomrnentnry on to nay market news nnd not as n complete El.nll!)o;ls. AddltlOnal mformntlon with respect to an)' lIeellrltlcs referred to her(!Jn wIll be fUlnZc,hed upon r C f l u e s t ' \\'N 301