Viewing Month: May 1959

Tabell’s Market Letter – May 01, 1959

Tabell’s Market Letter – May 01, 1959

Tabell's Market Letter - May 01, 1959
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Walston &Co. —–Inc —…..;.- Members New York Stock Exchange NEW YORK SAN FRANCISCC LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND ABROAD fiLE COpy CHICAGO TABELL'S MARKET LETTER May 1, 1959 The oays 01 we stralghtline advance may well be numbered. For the first time since October, 1957, the market has shown some initial signs of loss of momentum. This shows up most obviously in ratio of advances to declines. In th week ended April 24, 535 stocks advanced in price, and 741 declined. This ratio was mai tained on daily figures last week. This simply indicates that it is becoming more and mor difficult to select issues that are in an advancing phase, a typical characteristic of a mature bull market. At this stage, the careless investor begins to find that it is possible for poorly-chosen stocks to go down as well as up. This is not to imply that the bull market is over. The analogy of the current marke , and that of 1955, has been drawn before, but it bears restating. By the middle of 1955, the Dow-Jones Industrial average had reached a high above 470, and was still to advance to its ultimate high of 524. However, the period between mid-1955 and mid-1957 saw many wide swings of more than 100/0 in the averages, and in addition many stocks topped out a long time before the averages reached their peak. This could happen again. The' other side of the coin is, of course, that many stocks had worthwhile upside moves in tl e 1955-1957 period. The job of the analyst tOday is to select such stocks. One clue as to a possible investment opportunity may be gained from the recent action of the rail group. As most investors are aware, the Dow-Jones Rail average has refuse d to follow the Industrials into new high territory and is still below its 1956 high of 182. During the past two weeks ,action has been more encouraging. Last week while the Industrials declined, the rails held re2.conably firm. From a fundamental point of view, it would be unusual for an industrial recovery of the current magnitude to take place without concurrent sharp improvement in the f better railroads. One rail on our recommended list is CHICAG MI A ,OS. PAUL & PACIFIC (26 3/8). Both 1958 and first -quarter re t i co y 'were su'rp-rising1' gOOd. For the year, per-share earnings improved d e a decline in operating revenues. In the first three months of 0 ating income increased to 1.75 million from 22,000 in t rrier, which produces most of its earnings in the Summer mont 0 720,000 from 1. 8 million. On this basis, it seems will be surpassed in 1 t post-war earnings peak of 3.27 in 1955 b (lomfortable margin. Another st u ed list which has been temporarily weak is NOR THROP AIRC 1 . Investors who seem to be willing to pay almost any price for glamour lect c stocks have as yet failed to realize that almost two- thirds of Northrop's s fall into this category. The fact that the company's Snark program may come 0 an end in 1960, has been muer. overdone, and new programs are expected to take up the slack. At current levels, the stock is available for slightly over nine times last reported annual earnings, despite the fact that these earnings should increase in the fiscal year to end July 1959. As time goes on, and stocks on our recommended list advance it becomes necebsary to make deletions In order to make room for new canditates, HERCULES POWDER originally recommended at 481/8, closed this week at 70 1/2. The stock has an obj ective of an initial 78 followed by a longer-term possible 95, but as the initial objective has almost been reaChed, it is bEO;'lg dropped from our list. MeanwhIle, despite the fact that one maJor company cut its dividend last week, favor- able patterns Lave been building up in the aluminum group. KAISER ALUMINUM (41 3/8) has been building up a strong long-term base in the 48-22 area, and ability to reach 49 would indicate conSIderably higher levels. U. S. FOILB (50 1/4) the holding company for Reynolds Metals, has also built up a favorable pattern. Both these stocks are being added to our recommended list. EDMUND W. TABELL WALSTON & CO. INC. AWTat ThiS market letter 15 not. and under no circumstances ia to be construed (lB, an offer to Bell or a solicitatJon to buy any seeuritiea referred to herem The mformatlon contained hereln IS not guarnntced as to Ilccuracy or completeness and the furnlshmg thereof IS not. llnd under no circumstances is to be construed 8S, u representa- han by 'Walston & Co, Inc. All expresslOno; of opimon are subJect to change Without notice Walston & Co, Inc. and Officers, Directors, Stockholders Ilnd Employees thereof, purchaM, sell and may have an mterest In the securities mentioned herem This market letter 18 intended and presented merely ns a general, mformal commentary on day to day market neWli and not as a complete analysIs AdditIOnal mformatlOn WIth respect to any securities referred to herem Will be furnished. upon r e q u e s t . ' \\1;' 301

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Tabell’s Market Letter – May 08, 1959

Tabell’s Market Letter – May 08, 1959

Tabell's Market Letter - May 08, 1959
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FfLECOPY NEW YORK Walston &Co. Inc Members New York Stock Exchanae SAN FRANCISCC – LOS ANGELES PHILADELPHIA COAST TO COAST AND ABROAD CHICAGO TABEll'S MARKET LETTER May 8, 1959 The market suffered its sharpest break in some time on Thursday as the Dow Jones Industrials plunged 8.75 points and reached an intra- cay low of 611.68. A rally starting late Thursday afternoon carried through into Friday's market and most of the lost ground was regained. As has often been the case, the decline took place quickly. The downside obj ective of the top formed by the Dow-Jones Industrials was 615-612, just about the level reached at Thursday's low. Significantly enough, during the decline, the rail average did not brea ouLof.the trading range in which It has held since.thebeginning oLI959., . .- For the past few weeks thIS letter ha s tried to characterize the present market by drawing an analogy to the market of mid-1955. This comparison becomes more interesting as it IS examined closely. From ;1 low of 254.4 in September 1953, the Dow-Jones Industrials started a straigh line advance which was interrupted by only three minor corrections. A 4.40/0 drop took place in January 1954. This was followed by a 5.40/0 drop in August and a 4.40/0 drop in October. These minor down-swings were the only important corrections which took placE during the period. For most weeks during 1954, advances sharply outnumbered declins, and in the few weeks where this was not the case, the two figures were practically equal. There were S( idom more than 5 or 10 new lows for the year in any week, and new highs often number ed as many as 200 a week. It was hard not to own at least a few stocks that were acting \ e 1 As 1955 began, the swings became wider. The Dow average dropped 6.50/0 in January Two months later, in March, an 8.10/0 drop took place. through the summer, but in September and Octob.r, a decline of 10. t . All th is time the bull market was beginning sir,ndloSS of mome'n- tum. In March 1955' s drop, fr r example, 362 new 9 5 low re made uring the week of March 14-18. In the prevlOus – clmed. Iii the September 26-30, vs. 184 advances. Two obvious that many of the , c ad advanced while 1173 de-de– dauring-thE(weekofSeptemoerQ.O w 1955 lows were posted. It is new lows at this time continued declin- – ing as 1955 The sequel, s I el own. The market eventually mde a new high reaching 524.37 – ri 9 nd holding in a range between these levels and 453.07 for fifteen months. nn e entire perioq action was (,ytremely diverse, with many indIvidual issues ell and others acting very poorly. How does thIS action compare with the current market So far, the upswi!'g which started in October 1957 has been underway 18 months. The previous bull market lasted 30 months between low and high. The first signs of in- ternal weakness, as noted above, took place in March 1955, 17 months after the start .rof the bull market Significantly, the same signs have begun to manifest themselves. For the past two nks, declines have outnumbered advances. For the week ended May 4th, 122 new 1959 ,ows were posted. If the SImilarity continues, what type of market action may be expected Probably, something on the order of the following 1. The averages WIll continue cn into new high grOl.rd. ' 2. However, wide r swings will take place, and broader corrections than those experienced so far may be expected. 3. It will still be possible to acheive capital gains in selected issues, but the number 0 Issues in uptrends will be decidedly smaller. 4. The number of stocks acting poorly wIll increase sharply. It would thus appear that the time again has come to separate the men from the boys. Losses will become more prevailent, and stock selection will again be the si nc qua non of investment success. EDMUND W. TABELL WALSTON & CO. INC. AW rial TIllS market letter IS not, Ilnd under no ClrCtlmRt/lncc; is to he com,trucd all offi'r to ell or Il !Ihcltntmn to buy any seCUrities referred to herem The mformnt()11 ('I)ntllincd here1n1'\ not I.rtlllrantero lUI to Ilccurncy or complctct1els snli the furnihlll). thereof IS not, nnd under no cIrcumstances 1S to be COn'ltl ued a!', a rcpresentll hnn b \Vnbton & Co., Inc All (''lprCslOns of OPinton arc subject to change WIthout nollce Walston & Co, Inc, and OffIcers, Directors, Stockholders nnd thereof, plIrchn;e, sell and may have an mterest m the securIties mentioned herem ThiS market letter IS Intended nnd presented merely as n general, wf()rmal commentary on dny to dn) mnrket news and not ns a complete anah-sls Addltlon..!1 mformatlon WIth resPect to any flCCUl'ltles referred to herem WIll be furnished upon r e q u e s t ' \\.N 301 –'

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Tabell’s Market Letter – May 15, 1959

Tabell’s Market Letter – May 15, 1959

Tabell's Market Letter - May 15, 1959
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Walston &Co. In.c. Mernbers New York Stock Exchange FILE COpy NEW YORK SAN FRANCISCC LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND ABROAD TABELL'S MARKET LETTER May 15, 1959 I spent the past week in England and Scotland on a short business trip. It is interest ing to compare the stock market there with the American market. Both markets have risen about 50 since early 1958. Despite the equal rise, United Kingdom issues still appear reasonably priced in comparison with our equities. The yield on the averages on the London market is around 5, compared to slightly above 3 here. Uncertainty about the national elections, probably to be held in the Fall, is most likely one of the main reasons for the spread. Some very interesting values appear available in the London market. Our market staged a sharp recovery from the intra-day low of 611.98 on the Dow – Jones Industrials reached on May 7th. The rally of the past week carried to a new intra-day high of 637.04 on Friday. This is about the middle of 635-650 rally objective mentioned in my letter of April 17th, as the probable upside potential of the breakout of the 600-615 area in which the average held for some six weeks in March and April. Despite the rise in the averages, my breadth-of-the-market studies still Indicate a loss of momentum. Upside volume has been decreasing, and downside volume increas- ing. Over the past ten weeks, there have been more stocks declining than advancing, even though the industrial average is some thirty points higher. Although'these may-;be on preliminary warning signals, they suggest some caution over the nearer term and the possibility of at least a lenghty consolidating period. There are, however, no definite indications of a long term top. The best course of action still appears to be one of finding issues that are still undervalued in the light of prospects for the forseeable 'future. Such an issue is (\ 0 COCA COIc1 Coca Cola is the closed at 141 5/8 r e for 1958-1959 has been 98 1/2 -141 3/4. The company is e rink industry, and accounts for 45 of the total industry sales. d b e)l.) over 100 countries around the world. There is no long term debt, a owns 28 of the 4,232,078 shares outstanding. E s 58 et'-e equal to 7.10 per share. Unremitted profits from for ' r e .15 additional per share so consolidated earnings were equ 8 . . rnings for the first quarter of 1959 were 1. 24 per share, compare to in the initial 1958 quarter. The company maintains 30 plants with 15 of t well scattered around the world. Most of its syrup prod- uction is sold to large bottling companies hich supply local and independent bottlers operating in exclusive territories. Coca Cola was the blue-chip growth stock of the 1920's, and 1930's. It sold at 170 1/2 in 1937, and 200 in 1946. Since the early 40's, its profit margins have been slowly declining due to increasing competition. New operating management has adopted a more aggressive merchandising policy than was followed, heretofore and the promotional budget is steadily being increased. Sales in 1958w'ere at a new peak, and given favorable weather, should attain a new high in 1959. Sales in the future will be helped by the rising birth rate starting in 1942, and continuing to the present. This will add 2 million or more additional customers each year to the teen- age group. Foreign sales are also showing an increaSing growth trend. Last Fall, the company introduced, in certain territories, five new carbonated drinks that had been sold abroad for four years. This may add substantially to domestic sales when distributed nationally. It is possible that earnings may reach 7.50 to 8.00 per share plus 1.50, from unremitted foreign profits. In the late 1930's, Coca Cola sold at 20 to 25 times earnings, and, with increaSing profit margins, this might happen again. In addition, there is the possibility of a dividend increase during 1959. A stock split is also entirely possible. Techmcally, the stock has a very ,-ttractive potential. It has broken a down- trend line which has been in effect since, 1946, and is near an upside breakout of the 95- 1'45 in which it has held for almost ten years. The stock appears, from a t T IS ('t lettenr eISQnilo ,Ilnd ,T'rtr. unJer no Circumstances IS to he con nlcd as, n o!1'er to sell or a solleltattan to buy any as to accuracy or completeness and the furnl;hmv thereof 1111 expreSSIOns of opimon are subJect to challICe WIthout notcJ…7i'U'hlthi'LCoVVl'Qc referred to herem. The 1 formnbon '-.h'dd…ll'JUId5J..lichornescttrourse,d as, n representnStockholder'! aod thereof, purchafle. lIell and may have no interest m the IICCllrltles mentIOned herem ThIS market letter IS mtcnd-erl and presented merely aB a general. informnl commentary on dllY to day mllrkct news Rn1 not as a complete nonly;ts Addltwnal 'F)Nt&nO)1!ltlml/cri 10 hereIn wI!1 be f\lrnlShed upon request \' 301

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Tabell’s Market Letter – May 29, 1959

Tabell’s Market Letter – May 29, 1959

Tabell's Market Letter - May 29, 1959
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Walston &Co. —–Inc —– Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFfICES COAST TO COAST AND ABROAD TABELL'S MARKET LETTER lVIay 29, 1959 At Friday's intra-day high of 643.79, the Dow-Jones Industrial average had reach d the upper part of the 635-650 near-term rally objective outlined in my April 17th letter. Normal technical action would call for a consolidating period before the market resumes its rise on a broad scale. There are no tops of importance and the worst I can visualize at the moment is a trading range between 650 and 610. Percentagewise, this is only a 60/0 fluctuation from present levels. I still feel that the ultimate objective of the Industrial average is around 800 before a decline of much importance occurs. I would ignore the fluctuations in the general market and concentrate on the action of individual issues. The-Rail average, after reaching a-new hi-ghlast Friday,-drifte-d-slightly-lower —- during the week. Individual rails, however, are building up strong technical patterns. I particularly like Chicago, lVIilwaukee, St. Paul & Pacifi9 (273/4) which is on my recom mended list. The road has had a sharp earnings recovery and estimated earnings for the twelve months ended April 30th are 3.87 per share as compared to 2.73 for the year of 1958. At about ten times 1958 earnings, and only about eight times earnings for the past twelve months, the stock seems reasonably priced. If the present trend continues, earn- ings for full 1959 could be above 3.87 as a deficit was incurred in the 1958 second quarte and the third and fourth are the high earnings periods for this road. At the present dividend rate of 37 1/2 cents quarterly, the stock yields 5.30/0. There is the possibility of a merger proposal that also lellds speculative attraction to ST. The stock has held between 30 and 25 since mid-January and an upside breakout of this area would be very constructive technically. KAISER ALUlVIINUlVI (51) was added to my recommended list on lVIay 1st when it was at 41-42. The sharp price advance since that time to KAISER INDUSTRIES (15 1/4), which is listed on the AmerjM-n S 0 k n Kaiser Industrie is a holding company which owns 450/0 of Kaiser and selling around 53), and 390/0 of Permanente 0 0 0 Iser Steel (unlisted and selling around 25). All threeof these oment. Inaddition. Kaiser Industries wholly owns Henry J. 0 largest construction companies, and also Willys lVIotors, issue is speculative because t OWe There are also other holdings. The of long-term debt and beuause there will be an stock are conve u t 0 If all the convertible bonds and preferred n the outstanding warrants are exercised. However, the outlook for alu 1 , st and cement are favorable and this highly leveraged issue could move hig er . e trend continues. The range from 1955 to date has been 23 1/2 high and 7 1/ This low-priced speculation is added to my recommended list for those able to assume the risks involved. It is recommended for longer -term capital appreciation rather than short-term action. As time goes on, and stocks on our recommended list advance, it becomes necessary to make deletions in order to make room for new candidates. Two stocks on my recommended list are near upside potentials. FLINTKOTE (43 3/8) was originally recommended at around 30. It is quite close to its technical upside potential of 45-50 , and HOOKER CHElVIICAL (45 1/8) is also near its techmcal upside potential of 46-50. These stocks may be held for further moderate appreciation, but appear to be too near upside obJ ectives for new purchases, so are dropped from the recommended list. Possible replacements are Northwest Airlines (38), which may earn 5 in 1959, and Newport News Shipbuilding (39 1/2). This issue is now in a strong technical support level. It has been depressed by failure of Congress to appropriate funds for ship subsidies and for new aircraft carriers. However, the very favorable long-term out- look for foreign trade and possible new orders for atomic submarines place this com- pany in a favorable position. Earnings for 1959 should be around 5.00 and the 2.00 dividend yields 50/0. EDlVIUND W. TABELL WALSTON & CO. INC. This market letter IS not. and under no cIrcumstances IS to be construed as, an offer to sell or n soliCItation to buy any SecUrttles referred to herem The mformntion ('ontalned herem 18 not guaranteed IlS to nc('uracy tion b;. Wnlston & Co, Inc All expressions of ur completeness and the opmion arc subJcct to furmshmg thereof iR not, nnd under change Without notice Walston & no Circumstances to be construed as n representaCo., Inc, and Officers, Directors, SU;ckholde;s nnd EmploYl!eS thereof, purchase, mformal commentary on day tsoeldl aliyndmmarakyethlnlewe sana Interest In nd not as a the securities mentioned herem market letter IS mtended complete nnalYSls Additional Informntlon With respect to any and presented ml'rely as a general, securities referred to herem Will be furnisher! upon r e q u e s t ' \\'N JOI

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