Viewing Month: August 1960

Tabell’s Market Letter – August 05, 1960

Tabell’s Market Letter – August 05, 1960

Tabell's Market Letter - August 05, 1960
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I -;;-.-;;—— – – .- Walston &reo. Inc lE COPV Members New YQrk Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER August 5, 1960 The stock market underwent another week of wide price movements. After last Friday's sharp advance to an intra-day high of 618.35, the market continued to advance moderately on Monday to reach a high of 622.37. From then until the last hour on Thurs day, the average drifted downward to 600.28, with very small volume. In the final hour of trading, the market sharply reversed its trend and rcgained the day's losses. The advance continued on Friday when the intra-day high was 617.88. Ability to better Monday's high of 622.37 would, from a technical viewpoint, indicate an uptrend of at least intermediate term', importance. In days ()f secu,ity analysis, the somewhat simpler. than it is atoday. All that was- necessary wa's to discover 'what company had earned in the past and apply an appropriate multiplier to those earnings. One could then, with a minimum of time and effort, discover whether a stock was cheap or dear. Just precisely what this multiplier, or price earnings ratio, should be was some- what of a subjective matter, and depended on a number of outside factors, However, most authorities felt that a range between a P /E ratio of 8 and one of 18 constituted the permissible limits for common stock investment. The analyst who follows the classical theory can only scratch his head in bewil- derment at today's market. P /E ratios of 50-75 have become not uncommon and ratios in the 20's and 30's have become almost the rule for companies which have displayed any growth whatsoever. In order to ascertain value for growth stocks, numerous formula have been developed to replace the old PiE ratio. some of them rivaling the theory of relativity in complexity. Despite all these new theories, however, enough respect for the classical relationship of price to earnings still the suspicion that the current market is too high. to harbor \0J Only time will tell whether the classicists n ro tock theorists are more correct in their appraisal of security values.lt'jAl inte ng to note, however, dar of of stocks wliich are just plain a numbe!.. f 'e . ssicalsiindaras — . – – A few examples come i peka & Santa Fe (23) currently yields 6.30/0 on the indicated 0 1.t5('1rloicated earnings of 2.50 for 1960 give a price/earnings 0 nii' ' n f the largest and most efficient operating rail- road properties' t 0 th three exceptions, has paid dividends continuousl since 1900. Non-r I lOS greater than fixed charges and preferred dividends, which exempts the c rom cyclical fluctuations inherent in more leveraged rail- road stocks. 3tandard Oil of New Jersey (41) currently affords the investor a yield of 5 1/2 on the indicated 2.25 dividend, and it is rather interesting to note that it has not been available on such a generous yield basis since 1954. Much has been heard about the problems of the oil industry.;..nd they are real indeed. Nonetheless,Jersey's cash earn- ings have recovered sharply from the 4.89 of 1958 to 5.35 in 1959,and are expected to show a further moderate recovery this year. Earnings after non-cash charges should reach 3.10. No one claims dividend stability for Kennecott Copper Corporation (75), but the current 5.00 rate is the lowest the company has offered since 1949 when copper was selling at 19 per pound. contrasted WIth the 32 rate enjoyed today. 1960 earnings could reach 7.00 a share before depletion. It is interesting to note that the stock has sold above its present price in every year since 1950. This letter is not suggesting that the three stocks mentioned above are going to have substantial upside moves at any time in the near future. Technical factors, as a matter of fact, indicate just the opposite. However. they all three are just above their technical downside potentials Atchison at 22, Standard Oil of New Jersey at 39 and Kennecott at 70. This, plus the fundamental factors mentioned above, would seem to indicate that there is little downside risk involved in owning them at current prices. In other words. amid all the talk of greatly overpriced equities. it is comfort- ing to know that a large body of solid value stili exists in today's market. Dow-Jones Ind. 614.29 EDMUND W. TAB ELL lRaiJrla IS to be construed as, nn offer to sell or n ,eHGl herein The mformahon C'ontmned herem IS not gllftranteed as t6 nccursty or compietene5s and the furnishmg thereof IS not, andunder no c.lrc.umstances IS to be construed ns, a representa- .dtW'lj). Wll'ktbtl & Co Inc All expreSSlonll of optnlOn are BUhJect to l.hange Without notice Walston & Co . Inc . and Officers, Directors, Stockholderll Bnd sell and may have an mterest m the secUrltws mentioned herein ThiS market letter IS intended and presented merely as B general, Informal on dB; to day market news anq. not as a complete analYSIS. Additional Informatton With respect to any securities referred to herem will be . . . .. .. -.- . f'-'

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Tabell’s Market Letter – August 12, 1960

Tabell’s Market Letter – August 12, 1960

Tabell's Market Letter - August 12, 1960
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– FILE COpy Walston &Co. ..;,;..;,;.;;.,;; Inc Members New Yo,.k Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CH,/CAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER August 12, 1960 With the assistance of a reduction in the discount rate by the Federal Reserve Board from 3 1/2 to 3, the Dow-Jones Industrial average moved above the post-margi reduction intra-day high of 622.37 to reach a high of630.53 on Friday. As mentioned in last week's letter, this indicates, from a technical viewpoint, that the market is now in an uptrend of at least intermediate term proportions. The potential base formed by the triple bottom in the 600-597 area in March, May and July, has been enlarged to a potential 700-720, or an advance of 12-15. As for the rails, I mentioned that the Dow- Jones Rail average had a downside potential of 137-133. ,Last week's low was slightly c below that projection at 131.85, but the downside objective of 29 on the Standard & Poor's rail index was just about reached at 29.29. The upside potential on the Rail average is difficult to ascertain at the moment. There is overhead supply at the 136-147 level and it is probable that the average will spend quite some time in that area. Breadth-of-the-market has improved considerably. There were more advances than declines every day this week. On Tuesday when the Industrial average closed only 90 higher, there were 599 advances and only 368 declines. The figures on my weekly breadth-of-the-market index are not yet available at this writing, but I believe the index is quite close to the March high. This indicates a broadening out of the market and the probable emergence of new group leaders. Among possible leaders are aircrafts,air- lines, coppers, natural gas, oil and steel. As I have noted in the past, in the final stage of a bull market lower priced issues tend to perform better than the general market. This letter has published a package recommendation of low-priced stocks on was stressed that these issues be bought as a package in diversification in a speculative list of this lists have so far acted just about the same as the , occmons in the past. It d r 0 rGWide the necessary a j r mmendation e up and some down, butif the ull market is not yet d is could .relatively better actlOn than the market. -The 11st bel r 11g ferent than-the 11st of' February 26th as some issues like e graduated out of the below-20- a-share classification and recommended list. I have entcod a re S g 1959 Earnings Indicated Dividend Yield Allied Paper 1.62 – Avco 1B .93 .50 3.1 Chemway 1 B- .4.0 .40 4.0 Curtis Publishing B- .65 .35 3.2 Fedders Corp. 18 B 1.57(1) 1.00 5.5 Getty Oil 15 B .67 (stk) – Home Oil A 10 C – .37 .25 2.5 Hotel Corp. 5C .03 – – Intern'l Packers 13 B- 3.11 .60 4.6 Kaiser Industries 10 B- .61 – – Lear 20 B- .91 .40 2.0 National Can 8 B- .24 (stk) – Northwest Airlines 19 8- 3.68 .80 4.2 Oliver Corp. 20 1.39(2) .60 – 3.0 Pacific Petroleum 11 Publicker Ind. 11 Rayonier 17 RohrAircraft 15 Servel 13 United Industrial 9 None C B None C None – .48 – .61 2.35 1.40 1.26 (2) – .75 (stk) .80 1.00 .20 4.7 6.6 2.2 (1) Year ended August 31,1959 (2) Year ended October 31, 1959 Dow-Jones Ind. 626.18 EDMUND W. TABELL WALSTON f…. CO. INC. Dow Jones nails 198. 95 . hf t ThiA market letter is not, and under no ….. r.(.ez9 to be construed ns, nn offet to sell or a sohcltntlOn to buy any SecUrities referred to herem. T e In orma lOn contamed herem IS not guaranteed us to accuracy or completeness and the furnlshlrlg thereof lS not. and under no Clrcumstances lS to be construed as, a representa t on by Walston & Co Inc All expressIOns of opInion arc subject to change wIthout notice Walston & Co. Inc, and Offlcers, Dlrectors, Stockholders and Employees thereof, sell and may have an Interest m the secuntles mcntlOned herem ThiS market letter IS Intended and pr.csented merely as a general, mformal commentary on day to day market news amj not as D complete analYSIs Additional mformatlon wIth respect to any securIties referred to herem

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Tabell’s Market Letter – August 19, 1960

Tabell’s Market Letter – August 19, 1960

Tabell's Market Letter - August 19, 1960
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Walston &Co. – – Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER August 19, 1960 For the first time in over a year, breadth-of-the-market action has begun to sho some strongly positive indications. Last week's action is typical. The Dow-Jones Industrial average, closing the week at 629.27, was only moderately above the close of a week ago at 626.18, and the average actually declined on Monday and Thursday. Despite the uninspiring perform- ance of the averages, more stocks advanced than declined, on every day this week, and daily advances have now outnumbered declines for twelve consecutive days. It seems safe to predict that weekly advance/ decline figures wi-ll-.show that,-for -the-period just ended, far more stocks moved ahead than retreated. All this has had a marked effect on breadth-of-the-market stUdies. At their week' high of 631. 42, the Dow Industrials were some thirty points below the high of 663.64 reached two months ago. However, a week ago, the breadth index equalled its June high and appears certain to surpass it this week. Although figures are not yet available, the breadth index could even advance sufficiently to equal the March high which would place it in new high territory for the period since the January decline. The daily breadth in- dex has already exceeded the June high. In other words, a study of the price movements of all stocks reveals considerably better action than that exhibited by the market aver- ages — the first time this has occurred in many months. Volume figures corroborate the picture above. On a 25 -week-moving-total basis, upside volume reached a new high for 1960, and downside volume, which made a new low last week, declined further. Ten-week figures, which have been favorable for some time, continued their favorable action. On both a spread between advances and declines continues to narro W basis, the tlfls action is typical of the beginning of an intermediate uptrend. –' As was pointed out last week, the base forrrwffn the -Jones now gives an upside indication of somewhere aro st i2J' become-iQC1 un– –comineaat-thls prospect, e s – -YC– -e this prediction in the of the longer term outlook for the thi etter has stated repeatedly, it is expected that the range of I c market for the next three to five'years If this is to be the cas ,a ju the mid-point of this range. A move abov 700 would place e a K 1 breadth-of-the-m c r quarter of the area. Thus, while favorable eases the probabilities of an intermediate-term up- move, any such mo ove current levels would greatly increase the risk in- volved in owning equi This is a factor which should be kept in mind, especially when, as and if, an sustained rise above current levels occurs. Most shifts in market trends in recent years have been concurrent with a pro- nounced change in leadership, and it seems probable that this will be the case over the next few months. This letter has previously mentioned laggard groups which have cently shown fairly important reversals of relative strength. The aircrafts now appear to be in a positive uptrend and preliminary buying evidences were shown last week by the coppers and oils. Steels and airlines also have shown some upturn in recent weeks, although to a less pronounced degree. Meanwhile, other groups which had previously been market leaders, have deteriorated somewhat in terms of relative action. This includes department stores, electronics, food, office equipment, and soft drinks. Drugs and tobaccos, on the other hand, also market leaders for some time, have con- tinued to act relatively well. Other groups which have shown poor relative strength, such as aluminums, autos, cheInicals, machineries, papers, and rubbers, exhibit little or no improvement. Thus, current indications are that a certain amount of judicious switching of portfolios should now be undertaken to take best advantage of a probable impending. market uptrend. If a sustained rise occurs, strength should probable be used for the acceptance of profits and the partial reduction of equity commitments. Dow-Jones Ind. 629.27 Dow-Jones Rails 139.73 EDMUND W. TABELL WALSTON & CO. INC. A ')ilT. 8rnB This market letter IS not, and under no circumstances 19 to be construed .(lS, an offer to Bell or a soliCitation to buy any secUrities referred to herein The mfor.matlon contained herem IS not guaranteed as to accuracy or completeness and the furnlshmg thereor IS under no cIrcumstances 18 to be construed as, a representa tIon by Walston & Co., Tnc All e'tpresslOns of opimon are subject to change Without notice. walston & Co. Inc., and OffIcers, Directors, Stockholders and Employees thereof, purchase, sell and may have an mterest m the SCCUTIUCI mentIOned herein ThiS market letter IS mtended and presented merely as a general, mformal commentary on day to day market news and not as a complete analYSIS AdditIOnal mformatlOn With respect to any securities referred to herein Will be .. .. . .. .. . .

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Tabell’s Market Letter – August 26, 1960

Tabell’s Market Letter – August 26, 1960

Tabell's Market Letter - August 26, 1960
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Walston &-Co. LECO'Y Members New Y01'k Stock Exchange NEW YORK . SAN FRANCISCO LOS ANGELES PHILADELPHIA . CH.lCAGo OFFICES COAST TO COAST AND OVERSEAS lABELL'S MARKET LETTER August 26, 1960 The Dow-Jones Industrial average reached an intra-day high of 645.30 on Wednes- day for an advance of 45 points in fifteen trading sessions. The pace of the advance has been fairly rapid and some consolidation may be needed. There is some overhead supply at 645-660. However, breadth-of-the-market action continues its decided improvement. While the figures are not available at this writing, my breadth-of-the-market index probably moved above the March high. Volume indications also remain favorable on bot the ten-week and twenty-five-week moving totals. This also is the case on my advance/ decline patterns on the same graphs. The market, subject to minor technical correct- ions, indicates higher levels for at least the intermediate term; DIAMOND NATIONAL CORPORATION Current Price Current Dividend Current Yield 35 1/2 1.60 4.5 Long Term Debt 35,268,000 1.50 Cum.Pfd.Stk. 450,000 shs. Common Stock 4,474,294 shs. In 1953, Diamond Match Company was a relatively small lumbering operation selling wholesale and retail lumber, together with matches and woodenware. In the following year, the company embarked on an aggressive program of expansion through Sales, 1960-E 245,000,000 Earnings per Share-1960 (1) 3.10 Mkt.Range 1960-1955 – 44 7/8-25 1/8 merger. Acquisitions have included two small lumber companies, the General Package Corporation, a major producer of paper board and molded pulp egg cartons, the (1) Estimated. Includes equity in unconsolidated subsidiaries. Gardner boardld m 50 e . ypa Company, a paperanufacturer; a tler, producing milk containers and other wax-coated containers, 19 e U.S. Printing & Lithograph.Company., one oLAmerica's -s., — .. These additions produced a ab esults. (1) Diamond National (the name was changed last year) is no egrated packaging operation. (2) Fro 1953 to 1959, sales rose million. (3) In the same period, net in come has f Until now duce any increase' r, 10 flo. 3 million. 0 ny's tremendous increase in size has failed to pro- er common share. In order to expand, Diamond was forced to increase c m ares outstanding from just over one million to 4 1/2 million. ' .us, the i ase in per-share earnings has been negligible. Moreover, profit margins have declined from 6.5/0 after taxes in 1955, to 4.5/0 last year. Now that Diamond National has completed its program of expansion and integra- tion, it appears reasonable to expect that the company can devote its resources to bringing about the improvements in operating efficiency which could be expected to suIt from a fully-integrated operation. Some progress has already been made in this direction. Despite a low rate of residential construction, and resultant sluggish lumber sales, Diamond National's earnings for the six months ended June 1960 were 1. 45, contrasted with in the comparable 1959 period. Post-tax profit margin improved from 4.2 in 1959 to 5.8 in 1960. It is estimated that, for the full year,earnings should be in the neighborhood of 2.85 per common share, in addition to some per share equity in the earnings of unconsolidated subsidiaries. The process of improving profit margins has just begun, however. In this regard, the company is fortunate in having the services of a number of able executives brought in from U. S. Printing & Lithograph Co. last year, including the new president of Diamond National, Mr. William H. Walters. It is worthy of note that each 1 improvement in profit margins at the current sales level can result in an increase of about in annual pershare earnings. Sales are not expected to remain static,however. The dynamic consumer packaging field now accounts for more than 60 of sales and the company is able to offer a complete line of packages and labels designed, printed, and produced by Diamond. The lumber business can also be expected to recover from depressed 1960 levels. From a technical point of view, the stock has held in the 26 -41 area since 1956 and an eventual ability to break out of this range on the upside would indicate a possible 65. The stock, whose recently-raised 1.60 dividend provides a 4 5 Jrie1d,is heing a4g8Q tQ QYP

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