Tabell’s Market Letter – November 06, 1959

. Opy Walston &- Co. —-Inc —….;.- Members New Y01'k Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER November 6, 1959 Although plagued by irregularity due to the steel strike, the marke t moved ahead after the Election Day holiday, and the Dow-Jones Industrial average reached a high of 654. 38 on Friday. As has been mentioned in previous letters, an upside penetration of the recent trading range in which the Dow average has held has taken place. Breadth-of-the- market action remains reasonably good, and further strength from these levels would con- firm a reversal of the trend, eliminating the possibility that the entire trading area since early 1959 constitutes a head and shoulder top. Once this possibility has been eliminated, the technical picture should point rather obviously to higher levels ahead. Meanwhile, how ever, be exercised until-the picture is completely clear. – V.- – As always, the best protection against unforeseen market vicissitudes is the care- ful selection of individual stocks. A number of stocks on our recommended list appear to combine sizable upside potential with limited downside risk. INTERNATIONAL PACKERS, LTD., originally recommended at 16, and re-recommended last week at 21, reached a high of 24 3/8 on Friday. The stock still has attraction on a long range basis as a specu- lation on improving economic conditions both in South America and Europe. Action of other stocks on our recommended list has been less encouraging of late. RORE AIRCRAFT (16) is selling near its low for the year. However, the 1.00 dividend affords a yield of over 6, and, despite the poor earnings (1.40 was earn d in the year ended July 31,1959 vs. 2.18 in the prior year) the dividend appears safe. As the annual report points out, the shrinkage of margins was due in large part to start-up expenses on new contracts. It is believed these expenses have just about reached a peak. While earnings in the October quarter will probably improved over the period when ll per share was earned, a fairly steady u e d ul(l; continue for the rest of the fiscal year and earnings should at b t th 'scal 1959 perfor – ance. Sales should remain at their current levels, ho 1958,and a return to normal margins could well provide a worthwhile b.aings ease later on. Another one of oucrecommendations is CHICAGO,MILWAUKEE,ST. PAUL P F 6 rnings in the normallyprosperOl.ls' months of August and Septe ers Ii the steel strike and a wheat crop smaller than last year. Thus, r e ended September, only 26 was earned per share vs. 1.01 'n t 958 period. Earnings for the year will probably not equal the 2. Meanwhile, the out 9 a In, the 1.50 dividend earnings in 1960 for this does not appear in jeopardy. highly leveraged road appears good. By contrast, AT NORTHERN PAPER (49) appears well on the road to recover Net rose sharply in the third quarter to 41 vs. 16 in the 1958 period. Earnings for the forty weeks ended October 5th were 1.04 a common share vs. 8 a year earlier. The co pany has projected continued improvement in sales for the balance of 1959,and a gradual utilization of presently idle capacity. As noted in our letter of September 4,1959, the earnings potential as capacity is approached is considerable. NATIONAL DISTILLERS (32), another recommendation, has also shown good earn- ings improvement. Sales for the nine months expanded 110/0, and the earnings increase wa at double this rate with 1.63 per share being earned vs. last year's 1.32.For the full year, earnings should be,.close to 2.25 a share, with some 45 coming from the compan chemical activities. Recognition of the increased importance of these activities should ultimately lead to a higher P IE ratio for the stocK, and growth in chemical sales and earn ings,as well as moderate expansion in the liquor bUSiness should continue into 1960. Recent earnings of FREUHAUF TRAILER (29) improved even more dramatically as the stock moved into new high territory this week. 1. 43 was earned per common sha for the nine months ended September 30th, versus a 1958 deficit as the company began to show the effect of a drastic internal reorganization. With this reorganization complete, profits should continue to grow next year from the sharply increased demand for trailer for regular trucking, piggy-back, and other functions. AWTamb Dow-Jones Ind. 650.92 EDMUND W. TABELL WALSTON & CO.INC. IS to be as, an offer to sell or 11 sohcltatlOn to buy nny secUritieS referred to herem The mformatlOn ('ontnmed herem IS not IlS to accurncy or completeness nnd the furnlshmg thereof 18 not, and under no circumstances IS to be construed as, a representu- tion by Walston & Co, Inc All of oplllion nrc subJcct to chanJ!;Q Without notice Walston & Co, Inc, and OfflC(!rs, Directors, Stockholders and Employeeo; thereof, purchase, sell and may have an mterest m the securitIes mentIOned herem ThiS market letter IS mtended and presented merely as a general, mformni commentary on dny to day market news and not as a complete analYSI'l Additional mformatlon With rE!5pect to any securities referred to herem will be furnished upon r e q u e s t . ' WN 30l