Tabell’s Market Letter – December 04, 1959

\ Walston &Co. In.c, M embel's New YOl'k Stock Exchange FILE NEW YORK SAN FRANCESCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER December 4,1959 Action of the market averages over the past two weeks must be considered constru t e. On November 20th, this letter noted an uptrend channel that has prevailed in the Dow-JonE s Industrials in the past three months. This uptrend channel continued with the ability of th average to reach a new intra-day high of 668.70 on December 1st. The average has now pushed into the heavy overhead supply which exists in the 655-665 area, and the upside indication continues to be 705-710. Some strength was also noted in the Rail average during the past week. As previou I noted, the Rails had a downside objective of 143, and an intra-day low of 145.19 was on November 25th.' Since ,then, theo averages moved ahead, reaching a high 88 on Friday. Although the uptrend mayor may not continue, selected rail purchases appear to carry a minimum of downside risk at the present time. GREAT WESTERN SUGAR Price Current Dividend Current Yield 29 1. 70 5. 9 7 Cum. Pfd. Stock Common Stock Sales – 1959-60 (El Sales – 1958-59 150,000 shs. 1,800,000 shs. 110,000,000 107,380,000 Earn. Per Sh.1959-60 (E) 3.25 Earn. Per Sh.1958-59 3.13 Mkt.Range 1959-1955 317/8 – 191/4 seem to be such a stock. Great Western i -, ing for 'more than 3'quarter-of the In the advanced stages of a bull marke astronomical price / earnings ratios, and miniscule yields become the order of the day. Thus an equity with a p / e ratio of unde 10 and a yield close to 6 is somewhat of a rarity. When this stock, in addition, is of sound investment quality, has an assurec steady growth potential and, in addition, possesses as attraction near-term incre, s in eco doubly worthy of at Western Sugar would eadHig'l. beet sugar producer, accoun — been paid smce 1933, and h e of the past three years. The current 1. 70 rate a 5 n 6 based on recent prices. Balance sheet position is stro VI ,and only a small preferred issue ranking ahead of the common. In order to fu y u stand Great Western it is necessary to understand that sugar is a closely-regula ommodity with tariffs set up to protect the U. S. market, imports closely regulated and marketing quotas divided among various producers. The Sugar Act of 1948,as amended, divides up the U.S. sugar market between domestic beet producers, domestic cane producers, Hawaiian producers, and sugar imported from Puerto Rico, the Philippines, and Cuba. The provisions of the Act are extremely complicated but under the quota system as it is currently set up, U. S. producers should enjoy a growing share of a growing U. S. market. This should afford Great Western and the other domestic beet producers opportunity to increase sales at a steady rate over a period of time. Since capacity is ample, capital expenditures can be devoted to modernization of existing plant, thus im- proving profit margins. It lS, therefore, quite possible that net will increase at a great- er rate than sales in the years-ahead. In addition to its sound investment base, Great Western Sugar affords a measure of speculative attraction based on the current uncertainty in Cuba. Under the Sugar Act referred to above, over one-third of sugar consumed in the U. S. is produced in Cuba. Were Cuba's ability to deliver sugar to be impaired, either by nationalization of sugar lands, by refusal of growers to plant crops, or a change in U. S. policy, the resultant sugar deficiency would have to be made up by other sources. A major share of this deficiency would undoubtedly have to be filled by the U. S. beet sugar industry. Under such clrcumstances, the rise in Great Western Sugar's earnings could be 'quite SUbstantial. From a technical point of Vlew, the stock has an upside potential considerably abov present prices. The projection calls for an intermediate term 40 followed by a longer term objective of 55. Strong support is provided at 29-25. The stock is being added to StU I eesfflDiefle1eEllie1l rsp fHiPeRese is iRVQl!!r5J;Q.9Rt aQQQllptS seekips good income and is to be construed as, an offer to sell or a soliCitation to buy tb1\-b\rDed–ltt!relrHs tIOn by Walston & Co, Inc. All expressions of or completeness Ilnd opInion Ilre sllbJect the to fcuhramngsehm,giththoeurEtJriffld1r\f1c\i.o!u;OWJa(!tls't,rMftie&'\nitieo., purchnse, sell and mlly hMe lin mterest m the securItIes mentlOned on day to day mnrkct neWEl and not liS II complete analYSIS flirniRhcd upon r e q u e s t ' , referred to herem. The mformatlOn Is.to be construed as, a representalti'ters, Directors, Stockholders and presented merely as n general, referred to herein will be WN 301