Viewing Month: April 1962

Tabell’s Market Letter – April 06, 1962

Tabell’s Market Letter – April 06, 1962

Tabell's Market Letter - April 06, 1962
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'FILE CCPV Walston &CO. —-Inc, ;….;…..;….;..; Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHJCAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER April 6, 1962 J. RAY McDERMOTT & CO. INC. Current Price Current Dividend Current Yield 2S . SO 2.9 J. Ray McDermott is a unique operation. The bulk of the revenues of this Long-Term Debt Common Stock 26,468,907 3, S8S, 3S0 shs. New Orleans-based firm come from marine oil field construction, in whic it is the dominant factor in the Gulf Gross 'per. Revenues 1961-62 (E) SO, 000, 0.00 Coast area. The company's specialty Gross 1960-61 63,370,000 is the engineering and construction of Per Sh. 1961-62 (E) fer Sh. 1960-61 2.65 1. 00 Mkt. Range 1962-61 33 lIs – IS 7/s fixed-type offshore drilling platforms and the fabrication of the structures required for such platforms. In this rather specialized field, its reputa- Note Fiscal year ends March 31st. tion and accumulated know-how seem to assure it a unique competitive position. As most investors are aware, offshore drilling and exploration is perhaps the fastest growing segment of the oil industry. McDermott's recent history has reflected this growth. Revenues for the nine months ended December 31,1961, increased 360/0 to 59 million, and net income per share increased sharply to 2.04 from 25t; in fiscal 1960-61. For the full 1361-62 year, earnings per share have been estimated at 2. 65 vs. 1. 00 a ago. The dividend on the recently split cipated annual rate of SOt;. increased to an anti0 With the current market appraising the n e ev lmes year's results, the stock certainly appears to be a bargai 1 is e' iI that the company's good fortune is permanent rather than Federal-go;ernment recently held leased in the 3ulf of Mexico was al s a rs to be the case. The e 'hor' 'ein its' history and the 'acreage ' e im as great as in any previous sale. The obvious result of drilling and t er 's in equipment needed (or offshore h 1he bulk of this equipment will be supplied by IVlcDermott, the a' or ' e field. – Nor is Mc t' gr potential confined to 3ulf Coast operations. It is also active on the Pacifi Coas , through a subsidiary, in Venezuela. Extensive construct is carried out in Europe and, most important of all, in the Per- sian 3ulf. Here, ermott is currently working on a large contract for the Japanese- owned Arabian ;)il Company and is in a strong position to bid for contracts on other recent discoveries in the Persian Gulf area. McDermott has, in recent years, become truly a worldwide operation. The company's ability in offshore construction has also brought about achieve- ments in non-oil areas. The U. S. Coast Guard is now embarked on an extensive program for replacing floating lightships with fixed platforms. McDermott has been actively identified with this type of work, and this identification puts the company in an excellent position to participate in future Navy and Coast Guard business. In addition to their construction business, the company also is a fairly impor- tant oil and gas producer with extensive reserves in the,Gulf Coast area and in Canada. The gas phase of this operation is especially interesting as the company owns extensive reserves 'in the Gulf from which sales are expected to develop in the next two years. The oil and gas operation produced a rather substantial loss in fiscal 1960-61, but it is under stood that this experience has improved sharply in 1961-62, partially accounting for the sharp rise in overall earnings. Thus, despite the fact that McDermott's net income is at the highest level in its history, it would seem that further expansion is extremely likely. This, coupled with the statistical cheapness of the stock, makes it attractive for inclusion in capital gains accounts. Recently added to our recommended list, the stock has an upside objective of 50-53, with support just under current levels. JiiIM undtQl91!lrMlstances is to be construed as, an bJ;MZJL referred to herem. The mformatton -;-1'Ql\J;Djned-hfflt)l;Ile 1M lip or completeness and the okc\tptetances IS to be construed as, a representa of OPinIon are subject t() change Officers, DIrectors, Stockholders Qnd EmpIOYC'CB theroof, purchase, sell and may have an mterest in the securities mentioned herein This market letter is intended and presented merely as a general, mformDI commentary on day to day market news and not as B complete analYSIS Additional information with respect to any securitIes referred to herCln Will be furnished upon r e q u e s t . -, – \\'N 301

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Tabell’s Market Letter – April 13, 1962

Tabell’s Market Letter – April 13, 1962

Tabell's Market Letter - April 13, 1962
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.. ——–.——————— -. — — Walston &CO. Inc Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHjCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER Bermuda, W. 1., April 13,1962 For over a year, breauth-of-thc-market action has given a much more accurate picture of the stock market than have the various market averages themselves. The first four months of 1961 witnessed an extremely high volume of trading and featured sharp advances in speculative glamour and growth issues. During this period, our breadth in dex was moving sharply higher week by week. This is just another way of saying that a great many more stocks were advancing then declining. In May, the breadth index reache its high along with the volume and the overspeculation in issues of questionable quality. The Dow-Jones Industrials also reached a high of 714. 69A;in 'll.ttty, but by August had move into new high territory, attaining an intra-day high of 733.53 in SeJtember. The breadth index, however, failed to better its May high. This indicated a mo mentum and suggested lightening accounts on strength and adopting a more cautious atti- tude toward the market in general. In November, the Industrial Average again made a nev . all-time high at 741. 30 and again the breadth index failed to confirm the rise. At the present moment, the breadth index is near its September low. In simple language, there have, since May, been more stocks declining than advancing. Until this condition changes it is obviously impossible to have a broad market advance. This lack of upside momentull made this letter very skeptical about the probability of a broad Spring rally. The decline in the market since May has been brought about by a reduced buying interest rather than heavy liquidation. The 25-week total volume of trading on the New York Stock Bxchange has dropped sharply since May, but this drop has been paralleled by a downtrend in buying volume, with relatively little increase in selling volume. What the market needs is a revitalized buying interest. This could be brought about by a dyna- mic news development, a sharp increase in earning depth again to stimulate investment buying. decline of sufficient 0 From September until this week, the Ids av ge had held in a relatively narrow trading range between 741. 30 out of this range on the downside, tra If this penetration is followed by new lows i II h rage this week broke 1m 79.08 on Friday. ex, the downside potential for the Dow could be placed at n v50-610 area. However, at this point the relatively makes at least a minor rally a pos- sibility. If hoI abo i , rally from this point gathers momentum, ' the potential base ar u s possible 775. It will be noted that at current levels the averag' middle point of the two possibilities mentioned I above. With the new w' e Industrial Average, quite a few commentators have noted that this penetratio confirmed by a similar one in the Rails, would indicate a Dow Theory bear market. Personally, we consider the Dow Theory an outmoded technical method that has resulted in a considerable number of false signals in the past twenty years. Not only one but many technical indicators must be used in and selective markets. In recent markets, breadth and relative strength mdlces O'raphs of individual issues have indicated that a great many stocks have been in a bear for a year or longer. During the same time period, a sizable number of indi- vidual issues have been in a bdl market. Under the Dow Theory, the penetration of vtha January intra-day low of 686. 89, a level tested three.times since as significant. The tab Ie below shows the action of the Industrial Average and two mdlvl- dual stocks on these three occasions. Sept; Low Dow-Jones Ind. 688. 87 -Jan. Low 686. 89 April Low (TO date) 679.08 Brunswick Corp. 57 38 32 Burroughs Corp. 30 39 45 It is obvious that these two issues pursued their own individual ways regardless act ad an coo lIIO c e l l , ; This market letter IS not. and under no clrcumstnnces IS to be con;trued as, an offer to ;('11 or herem The InformatIOn hcrel1l.h 'l'01jirJ.Hl.rnntClrl1I1 or completeness nnd the furmshmg thereof 10m;, 'h'ttd un-der no circumstancesJ,s tp.k.c construed (lS, a rcprescntn J…ilU'M.IITyJ,Ga.6hS&JaoY.lnr of opinion arc subJcct to change Without JWltisQAf'4l'Illd. he nilil plrectors. Stockholders and Bell P'H'c an mterest III the secUrities menhoned … li'rf'enaM ana presented merely as n general. furnished upon requeJ!t U! dnJ ltet9ws nn9 not as a complete anahsIs AdditIOnal informatIon With respect to any SecUrities referred to herem

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Tabell’s Market Letter – April 19, 1962

Tabell’s Market Letter – April 19, 1962

Tabell's Market Letter - April 19, 1962
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..— &-Walston Co. Inc. Members New YOj'k Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFices COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER April 19, 1962 The market action of the past few days has been, to say the least, rather interes – ing. Last week's decline brought the Dow-Jones Industrials to an intra-day low of 679.08 on Friday. This proved to be the low for the move as, after a decline on Monday, the ma ket rallied sharply on the last three days of the abbreviated week, reaching a high of 696. 80 on Thursday. This action was hardly surprising as, based on most short-term indicators, the market at the end of last week was more oversold than it habbeen at any time since late 1960. At least, a technical rally was to be expected,and such a rally did manifest itself. The question, of course, now arises as to how far the strength can be expected to carry. At the moment, the entire 700-740 area constitutes overhead supply with the nearest supply concentrated between 710 and 720. The extent and vigor of the rally into this supply area will be extremely helpful in predicting future market action. For the mo ment, at least, the probabilities seem to favor an intermediate-term downtrend. Our breadth index,along with the averages, penetrated its September low last week, indicating a continuing loss of upside momentum. As stated in last week's letter, possible downside objectives in terms of the averages appear to lie roughly in the 650- 610 area. The possi- bility of such a decline should hardly be sufficient to warrant wholesale panic. Indeed, this becomes even more true upon examination of individual stock patterns, many of whic indicate the possibility of much better-than-average market action. Thus, as has been the case before, notably throughout 1960, it is quite possible that, while the averages remain under downside pressure, a good many stocks may move ahead. If this is the type of market that is envisioned, the concept of relative strength becomes extremely important. Relative strength measurKCAnsytutes, in the sim- plest terms, measurement of the action of a stock ind r gMtlp c mpared to the action of the market as a whole. We maintain for a I and extensive library of relative strength charts on which the ratip fsp) vario ocks and group indices to thegcncral weekly, oed. cha-r-ts are ex- tremely useful in determining what keto However, a number of ex ed to outperform the general mar B' relative strength indications can be obtained without c. week's letter we compared the prices of two stocks, Brunsw' k d u ug, 1ft the September, January and April lows. 2n each of these r a a ges were about the same. Brunswick, however, was lower on eacH e ccessive dates and Burroughs, by contrast, was higher. This was simplyano of stating that the relative strength of Brunswick was ex- tremely poor and tha urroughs extremely good. The invest r can very easily make the same test on all the issues in his port- folio. Ideally, most of the issues held should have been higher at their January lows than at their September bottoms and higher still at their lows of last week. Certainly, issues which have made successive new lows in September, January and April should be scrutinized for possible sale. Cne of the characteristics of relative strength down- trends is that they tend to continue for some time. It is interesting to compare various Standard & Poor's group indices on each of the three above mentioned dates. Cf 68 major indices, 20 have confirmed relative uptrends by posting higher prices at each of the three successive low points of the mar- ket. These groups are Auto Parts, Carpet and Rugs, Distillers, Metal and Glass Containers, aper Containers, Fertilizers, Finance, Machine Tools, Inter- national. Cils, Radio and TV Broadcasters, Radio and TV Manufacturers, Rayon, Mail -rder, Shipping, Cigar Manufacturers, Vegetable Oils, Electric Utilities, Gas Util- ities and Gas ipelines. Meanwhile, 8 groups have posted successively lower lows on each occasion. These were Aluminum, Cement, Roofing and Wallboard, Chemicals, oo,lectrical ..!;quipment, Electronics, Small Loans and Foods. The action of the remain- ing 40 groups was mixed. Admittedly, comparisons such as the above are elementary and certainly should not be the only factor taken into account in market analysis of a given stock. They do, however, provide a simple but illuminating indication of the true trend of stocks and industry groups. AI\TTHONY W. TABELL lJllR'hnd is to be construed 115..an offer to sVilALSJtQN to herein The informatIon r!!.stll.ta.ine4 betehds W..B'f4rJl,nteedtP.1l 'i9 or completeness and the furnishmg thereof IS not. and under no circumstances IS to be construed as, n rcpresenta All Jdtli),lsiSrW of opinion are subject to change notIce. Walston & Co, Inc.. and Officers, Directors, Stockholders and Employees thereof, purchase, sell and may have an Interest m the secUl'll.les mentIOned herem ThiS market letter IS intended and presented merely as a general, mformal commentary on day to day market news nnd not as a complete Ilnalysis Additional mformatlon WIth respect to any securIties referred to herein Will be furmshed upon r e q u e s t \\ N 301

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Tabell’s Market Letter – April 27, 1962

Tabell’s Market Letter – April 27, 1962

Tabell's Market Letter - April 27, 1962
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4' , I, I Walston &- Co. lnc – – – – – Membe)'s New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CH.lCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER April 27, 1962 The question in most investors' minds today appears to be – What is wrong with the stock market Unfortunately, the timing of the question is bad. It should have been asked over a year ago when speculation was rife and when a great many outright speculations were labelled growth and glamour issues entitled to sell at forty to eighty times earnings. There is nothing particularly wrong with the stock market today. It is simply returning to a more reasonable basis. The market action of the past several yeaI s has been largely an escape from reality. With most important companies showing a statlc earnings trend since 1957, any company, regardless of size or asset value, that showed even a semblance'of a-growth trend was'bid up toridfc-lilO\lS levels'on'thedneorytnal'lhe-'–' earnings trend (based on a mechanical formula) justified the high price-to-earnings multi pIes. Today's market is paying more attention to the fundamentals of value and is asking what earnings may be six months or a year from now rather than making vague project ions of earnings five years from now. If this trend of thought continues it is entirely possible that Benjamin Graham's two books, Security Analysis (co-authored with David L. Dodd) and The Intelligent Investor may reach the best seller list just as How I JvIade Two Million Dollars in the Stock Market by an acrobatic dancer, did two years ago This letter has adopted a cautious attitude toward the market for almost a year. Our breadth index reached its high last May and has been in a downtrend since that time. A new low was reached this week. Other technical indicators show no change in the down ward pattern. The Rail average has declined below the December low and has confirmed to at least one school of followers, a bear market under the Dow Theory. As we men- tioned recently, this signal comes awfully late in the game. The market, certainly in the case of a great many stocks, is probably much its high. Our technical work suggests a possible decline to the I v \ijJfue ow-Jones Indus- trial Average. Today's intra-day low was 668. As we have said many times action of individual stocks is much' more impo'rtant than the a ' ra – whetheror not the averages reach new low territory, e stocks that are in long-term up- trends and a decline in the a buying opportunity in these favorable situations. Relative ldual stocks is an important technical indica- tion during e The issues that hold up best in a downward trend are i e next advancing phase. The issues that act the worst usually need a rene'\4tl bf . stor confidence and, in technical language, the formation of a new base before dvance is resumed. This usually takes a very long period of time. One thing appears pretty certain about the technical picture at the moment. The leaders of the next upward phase of the market are going to be quite different than the leaders of the 1958 to 1961 phase. For a year this letter has stressed the thought that the action of the market offered an excellent opportunity to upgrade accounts. This advice is repeated. While a great many over-exploited issues have been declining 300/0 to 600/0, there have been many issues that have been advancing in a general downtrend. We believe this action will continue and suggest the following issues for purchase American Viscose (55 3/4) Kerr McGee (38) Anderson Clayton (42) &-S;-F;-(25) McDermott, J. Ray (24 5/8) '— Newmont 1/2) -. Beaunit Mills (26) Panhandle Eastern L. (55 1/4) Bendix Corp. (64) Raytheon (37 1/4) Burroughs Corp. (42 3/4) Royal Dutch (39) Consolidation Coal (37) Stevens, J. , (33) Crown Zellerbach (53) Swift & Co. (41 7/8) Electric Storage Battery (513/4) Union Bag-Cajp (38 1/2) Gulf Oil (41) U. S. Plywood (47 3/4) International Min. & Chern. (45 1/2) Woolworth (74) Dow-Jones Ind. 672.20 ES J .Ill 1 lSB 'fB EDMUND W. TABELL lATA T STcM 8T CO INC I I l

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