Viewing Month: June 1962

Tabell’s Market Letter – June 01, 1962

Tabell’s Market Letter – June 01, 1962

Tabell's Market Letter - June 01, 1962
View Text Version (OCR)

filE COpy W—-a–l-s-tlnocn—&–C–o–. Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CI-YCAGO OF-FICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER June I, 1962 This week, for two trading days, the Dow-Jones Industrial Average dipped below the 600 level and offered the long-term investor an excellent opportunity to pick up blue chip investment issues at sizable price concessions if he had the courage to buy on weak- ness. Starting late last week, institutions were heavy buyers on a scale down and con- tinued to buy this week. Failure of the much heralded Spring rally and the breaking of year-old lows in the averages in April weakened the investor confidence of the smaller holder, and the slow erosion of values finally culminated in some rather panicky selling tliis week. Additional-selling appeared.t9,tem from forced liquidation of bank loans on unlisted glamour issues. Evidently there was a lot more cr-edit in the -market outside-of' margin accounts in New York Stock Exchange firms than most people realized. This sell- ing, coupled with some margin calls in regular and subscription accounts, brought about heavy liquidation in smaller lots of from a hundred to two-hundred shares, and resulted in a tape that ran until 807 p. m. on Tuesday. With most of the necessary liquidation out of the way, better-l5(rade issues recovered sharply and by the end of the week had regain- ed all or a large of the week's losses. The Dow-Jones Industrial Average, which had closed at 611.88 on Friday, May 25th, declined to an intra-day low of 553.75 on Tues day and bounced back to an intra-day high of 625.00 on Thursday. Friday's close was 611.05 for a loss of only 73 cents on the week — after being down at Tuesday's intra-day low. At the week's low of 553.75, the Industrial Average had lost the entire gain of the rally that started ten days before Election Day in 1960. From a low of 564.23 in October, 1960, the average reached a high of 741. 30 in November, 1961. This comparatively rally of 30 in the average obscured the hectic valued gla- mour stocks and new issues. This gambling e a\ The 25 decline from the 1961 high in the Industrial te decline since 1946, has brought the market back to a much sounder basfu.v/l our opinion, liave r interme– — diate-term uptrend. The Industrial ve e ecl ' 187 points from the November ment to somewhere between 6 ursday's intra-day high of 625.00, the average had backing and filli te .d of is objective. The sequel should be the necessary e orm a base for a further advance. The 575-553 range should furm a 0 sort area. Over the longe we envision a lengthy trading area that may last into 1964- 1965. It may be ve milar to the 1946-1949 period. In 1946, the Dow-Jones Indus- trials declined 25 rrom 213 to 160 and then held in a range between 160 and 195 until late 1949. Translating this into the present market would result in a trading area between 553 and 675 until some time in 1965. Obviously, this is only a broad outline. The timing and scope might be quite different than in the earlier period. There is much more in- vestment interest in the market today than in 1946-1949 and it is entirely probable that the trading area will be broader. If we are in error, it will probably be on the upside of the range. The average may return to the 700-750 level. On the downside, we find it difficult to envision the average cleclining below the 1956-1957 high of 525. In fact, we doubt if the Industrial Average will sell much below 500 in the lifetime of anyone read- ing this letter. . Incidentally, some of us oldtimers who were around in 1929 deeply resent com- paring this week's market to Black Tuesday on October 29th, 1929. Don't take away our illusions. This is like, in baseball, comparing Roger Maris to Babe Ruth. Sure, there were 14,300,000 shares traded this Tuesday, which is almost equal to the 16,410,000 shares traded in 1929. But there are over seven times as many shares listed today. To equal 1929, the turnover should have been over 100,000,000 shares. The market declined 34.51 points this Monday as compared to 30.57 points on October 29th, 1929. But on a percentage basis, the 1929 decline was 11. 7 against a petty 5. 32 on Monday. Even \ the Eisenhower heart attack decline in September, 1955 was greater than that. True, there were a few margin calls this week, but in 1929 a third of the total shares listed were held on margin of as little as 10 as against 70 margin today on about 5 of the total stocks listed. Belax Bl1ster youlll never see the equal of 1928 agajn mnrll;et letter is.not..antl,'qnVer lJOWmd 0fHa & nois to be construed 88, IlD offer to seU or completeness and the furnishing thereor-'utifot 'aM 'b.'nifer to berein. The infonnntwn be eoustrued ru!, a reprellenta.- .. … of ol)inion are subjecl; to change without . Directon, StocldJolderto; and an intcTmt in the BeCUritie!l lDcntloned bcreiVI merely as I'L general. informal commentary on day to day market news an4 not as a complete an.a.buill. Additional information with reped to any secmntiel!l nferred to herein will be furnished upon requert.. '. WN 301 — .

Download PDF

Tabell’s Market Letter – June 01, 1962

Tabell’s Market Letter – June 01, 1962

Tabell's Market Letter - June 01, 1962
View Text Version (OCR)

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE nciden – -' 'this' L us old t ime,rs ,Who arou-'J'U.. sions. This is like, in baseball, comparing Roger Maris to Babe Ruth. Sure, there were 14,300,000 shares traded this Tuesday, which is almost equal to the 16,410,000 shares traded in 1929. But there are over seven times as many shares listed today. The market declined 34.51 points this Monday as compared to 30.57 points on October 29th, 1929. But on a percentage basis, the 1929 decline was 11.7 against a petty 5.32 on Monday. True, there were a few margin calls this week, but in 1929 a third of the total shares listed were held on margin of as little as 10. Relax, Buster, you'll never see the equal of 1929 again. Edmund W. Tabell, Tabell's Market Letter June I, 1962 Among all the other things it had to contend with, the stock market may also have, this month, run afoul of the American public's penchant for round numbers. No one who follows the financial press can now be unaware that October 1979 is indeed the 50th anniversary of October, 1929. This month's market break was accompanied — and, who knows, possibly partially stimulated –by feature articles, headline reproductions, and bad jokes about the 50-year-cycle. The market events of a half-century ago have long since become part of folklore and have regularly been alluded to during weak stock markets, often by writers who were not there at the time and have never taken the trouble to study the magnitude of the great crash. The writer's late father, who was there, took the opportunity to remind readers of the differences in the above I-q-'utooataayt.ion. Thefailure.of recent markets to measure up to 192'9'-s impact is-even 1I10re,pronounced Let us, for example, consider the record volume of October 9 this year when 81 million shares changed hands. This figure was 2.85 times last year's average daily volume. By contrast, the 16 million shares that traded on October 29, 1929 were 4.8 times the average daily volume for 1928. An equivalent figure today would be 137 million shares. But even 1928 had been an era of relatively heavy activity. There were, in 1929, some 1,127 million shares listed, and Black Tuesday's volume was almost 1l of that. Were the same percent- age of listed shares to trade today, it would produce a volume well in excess of 400 million shares. As pointed out above, the 11. 7 decline on the Dow (equivalent to 100 points today), which took place on a single day in October, 1929, has never been even approached in recent years, nor has the almost-50 loss of market value which took place in the short space of 2! months from September to mid-November, 1929. The magnitude of this decline was approached in 1973-74, but that process took the better part of two years to complete. Percentages, however, tend to mask the real extent of the 1929 break. When the Dow was at its 1929 high of 386, the divisor was 10.47, meaning the average Dow stock had a market value of 134. By the end of the whole process, that average 134 stock had dropped 69 points. It is interesting to contrast this with October, 1979 when the average price of a Dow stock was 44 and the average decline as the market moved from around 900 to around 800 was 4-7/8 points. Much is heard of margin debt today, and viewers-with-alarm point to its recent highs around 12 billion. An equivalent in today's terms of 1929's margin debt would exceed 200 billion. It is all well and good, of course, to remind ourselves that 1929 was a unique event which the stock market has not, to date, repeated. The relevant question, obviously, is whether we are -, vulnerable to a future repetition. Voices are being heard today which would suggest that this so, and this, in itself, is probably the most encouraging argument. The key fact about 1929, as historians have pointed out, is that there were practically no voices warning of impending disaster. Indeed, a cacophany was predicting exactly the opposite. Today we have a public .which, far from borrowing in order to own a quarter of the total market value listed on the New York Stock Exchange has salted away a record 37 billion in short-term debt instruments via money market funds. Relax, Buster. Dow-Jones Industrials (12 00 PM) 807.08 S & P Composite (1200 PM) 100.27 Cumulative Index (10/25/79) 697.17 ANTHONY W. T ABELL DELAFIELD, HARVEY, TABELL AWT sla ' No statement or expression of opinion or any other malter herem contained is, or IS to be deemed to be, directly or Indirectly, an offer or the 50l\clloon of an offel 10 buy or sell trny securrty referred 10 or mentioned The mailer IS presented merely for Ihe conVellenCE of the subscrrber Whrle oNe believe the sources of our Informo- hon 10 be relltrble, we In no woy represent or guarantee the accuracy thereof nor of the m,-,de herein Any act, on 10 be to!…en by the subSCriber should be bosed on hiS own investigatIOn and Information Janney Montgomery 5coll, Inc, as a corporotlon, ond Its off,cC!rs or employees, moy now hove, or moy later toke, POSItiOnS or In respect to ony seCurrtles mentioned In thiS or ony future Issue, ond such POSItiOn may be different from any Views now or hereofter expressed In Inl5 or trny other luue Janney Montgomery Scoll, Inc, which IS registered With the SEC os an Investment odvlsor, mtry give adVice to Its rnvestment trdvlsory ond olhel customers Independently of ony stotements mode In thiS or In ony other Issue Further Information on Qny securrty mC!ntloned herein IS available on request

Download PDF

Tabell’s Market Letter – June 08, 1962

Tabell’s Market Letter – June 08, 1962

Tabell's Market Letter - June 08, 1962
View Text Version (OCR)

…. – – Walston &Co. lnc filECOPl Members York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER June 8th, 1962 After the hectic atmosphere of the past two weeks, ThuIlPay's.anl Friday's relatively quiet markets were somewhat of a relief, giving the investor a chance to sit back, assess the dam age and decide what action to take. Any plan of action, of course, must be based on some idea of what type of market is likely to prevail in the near future. Here history affords us some clues. Cne relative certainty is the fact \tat tJu;re will be no return to the type of market tha t prevailed in 1961. As the president of a large mutual fund was quoted as saying last week, accept the.premise that prices were too high and yields too low to begin 'with, there is no reason to think that the market will go wnere it what, then , is likely to happen Fortunately, a selling climax such as that which occurred at the end of May is a com- paratively rare occurrence. Only five have occurred in the past 40 years—-October. 1929, Cctober 1937, September 1946, October 1957 and May 1962. In last week.'lIle,tter we dismissed the thought of any comparison with 1929. The following table gives some data action of the Dow following the other three selling climaxes noted. The figures shown ar the low reached on the selling climax, the percentage drop from the bull market high, the low reached on the next major .(.wnslI'ing, the subsequent major high, the percentage retracement of the entire downswing, the final low at the start of the next bull market and the time in months from the climax low to the final low Climax Drop Next Subsequent Retrace- Final Low From High Low High ment Low 1937 116 41 97 159 63 93 1946 1957 160 25 416 21 167 195 424 459 160 W40 0 440 Time in Months 53 32 6 1962 555 25 – – It will be noted that in all cases except, 1937, the iMilx lowed out to be the final one. In both 1937 and'1946, the f to,low-was . -third's. Also 1937 and 1946 were 1957, the consolidation period was 0 . ive engthy consolidations,whr after duration. Carcfd assessment of leads to the belief that the post- May 1962 market will Olmi 0 similar to the post-1946 market than the others. The Ma 9 n 10 555 on the Dow-Jones Industrials will probably hold although it m en tly. On the upside the two-third retracement would prodl(ce a high in th Ollt 675. This may be exceeded slightly but probably not by much. The ne ajor question is, of course, how long a consolidation will be require.!. 1937-194 nd 1946-1949 were both phases in a major bear market. It would be logiooal, therefore, to cxpect the 1962-l96 conoolidation period to be shorter, but it would be highly unrealistic to expect it to be anywhere nearly as alhort as 1957. The best guess at this point is that it will be fairly close to two years before we have the start of another Lajor bull market. 2ne other major point about post-climax markets is worthy of note. In all of them a minority of stocks reached their lows at the first or climax low in the averages. In 1946-1949 for example 48 out of 55 major industry groups measured by Standard & Poor's made new lows after September 1946 despite the fact that the averages reached their low on that date. In 1937-1942 and 1957-1958, less the!! half of the 55 industry groups reached around the time of the first low in the averages. – ;)n the basis of the above data, investment policy becomes pretty clear. Periods of general market strength should be utilized for disposal of issues that look unattractive technically and still appear to be fully priced in relation to earnings. Cash thus realized can be utilized for purchase on weakness of issues that, from a technical point of view, appear to be among the minority that reached their ultimate lows in May. Dow Jones Ind. 601. 61 Dow Jones Rails 126. 52 ANTHONY W. TABELL WALSTON & CO. , INC. Thll market letter 18 not. Bnd under no ClrCYmstnnees IS to be construed as, nn offer to Bell or a soliCitation to buy flny secunties referred to herem. The mformatlOn contained herem IS not gtlnrnntced as to accUracy or completeness and the furnlshmg thereof IS not, and under no CIrcumstances 15 to be construed nB, Ii representa- tIOn by Wnlston & Co Inc All e.pressJOns of oplnlon arc subJect to change WIthout notice Walston & Co, Inc, and OffIcers, DIrectors, Stockholders and Bmp!oyees thereof, sell and may have an mterest m the securltles mentioned herem ThiS market letter 1'1 intended and presentf'rl. merely as Ii general. mformnl commentary on day to day market news ane not as n complete analYSIS Addltlonnl mformatlOn WJth respect to any securittes referred to herelO ';111 be furmshed upon request \\ N 301

Download PDF

Tabell’s Market Letter – June 15, 1962

Tabell’s Market Letter – June 15, 1962

Tabell's Market Letter - June 15, 1962
View Text Version (OCR)

r—- ,i Walston &Co. lnc Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHlCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER June 15th, 1962 A heavy deluge of selling dominated the, market most of last week and the Dow-Jones Industrial Averages reached an intra-day low of 556.09 on Friday. Aggressive insti- tutional buying apparently stemmed the tide and the Industrials staged a sharp rally late Friday on heavy volume closing 17. 44 points above their hourly low at 57B.IB. ever the past few weeks this letter has made a number of comments regarding the type of market action that was to be expected following the selling climax of May 29th. Jne such comment was that probabilities favored a return to a level either slightly below or slightly above the May 29th lows. This occurred this week with new closing – – – . . . . . . . – .- —' – -' , -….,…. . ——'oT … – – -;. …. – and hOtirly-lbW's'belng'rEfglsterea.- The previous intraday low or553. 75, however, 'held. Another characteristic of post-climax markets, discussed at some length in last week's letter, was the fact,that, although the averages often make their low on the initial decline a minority of stocks do so. This was borne out by last week's action when, at Thursday' low, only 430 common stocks listed on the New York Stock had managed to hoI above their Nj,ay 29th lows. Some 600 stocks, therefore, had gone on to new low levels. Eowever, the impressive action displayed by the general market late Friday would indicate that the first test of the lows has probably been successfully completed and, despite Friday's strength, the market still appears to be at a level where downside risk is small. The paramount question, at the moment, of course, is what stocks appear most attractive for new purchase. bviously, the 430 stocks that did not reach new lows this week have displayed encouraging technical action. Listed below is a representative group of stocks which, at Thursday's lows, had held considerably above their May 29th bottoms. It excludes Electric and ;;as Utilities, We have underlined those which appear particularly a ttracti)1for w a the present time. jcost of these stocks are on our J4st ne ditions to the list are marked with an asterisk. In addition, the fractional ne;wJows,also-appear,attl'active f – w IVlc3ee, J. Ray McDermott, Electri St stoc though they made -l'-m,strongR ubber,,-Kerr– d Reynolds Metals. Adams Express Air '\\ V ood Fair Mesabi Trust Mt. Fuel Supply Allegheny C 0 Fruehauf Trailer ;'\Tat'l Biscuit Allied Mills Jarrett Corp. Nat'l Dairy Alpha-.ortland em '3eneral Mills Newport News American Cpti General Motors Niagara Shares American Seating Giant Portland North American Av. American So. African;reen Shoe North Amer. Car American Viscose Gulf Gil Northwest Air Amphenol-Borg Heller (Walter) Norwich harm. Ashland C-il Hershey Chocolate Pepsi-Cola Associates Investment Homestake Mining et Milk Atchison, Topeka & S. F. Hudson-Bay Mining Pillsbury Mills Borg-li!arner Illinois-Central Revlon Brown Shoe Interchemical Royal Dutch Burroughs – — International Min. & Chern. International Silver Schenley Cluett- Deabody oca-Cola Colgate Polmolive & Aikman Continental eil Dan River Diamond Alkalai Island Creek Coal Jewel Tea 'Korvette, B. J. Lane Bryant Lockheed Air Macy (R. H. ) Marine lIljidland Standard Brands Std. Cil of Calif. Std. Oil of N. J. Stev'ens ( J. P. ) Texaco Texas ,aC. Coal Torrington Dome I;ines Dre wry's Ltd. 'c'astern ;as Fuel McCall McKesson & Robbins Melville Shoe United Biscuit U. S .lywood Vanadium Alloy Thla mhM.erc&a3li'qil and under no Clrcumstunces IS to be construed buy any secuntieS referred to herem The mformatlOn I'ontfuncd he-rem not guaranteed as to accurncy or completeness and the furfllshmg thereof IA not, and under no CIrcumstances 19 to be construed as. a representa- tIOn by WRiston & Co Inc All eXpreS910ns ot opifllon are subject to change without notice Walston & Inc. and Stockholders and sell arHl'ittAf nn mtcrcst in the secunhcs mentIOned hercm ThIS mntkElll.TI ihlNdeWnd n lLv as a general, I!lt '1' to day'fuhr'1MthhWs nn9 not as a complete anah'sls Additional mformatiob'writli r ed lo'hny sctun lea re eIre toherem v.;ill be N 301

Download PDF

Tabell’s Market Letter – June 22, 1962

Tabell’s Market Letter – June 22, 1962

Tabell's Market Letter - June 22, 1962
View Text Version (OCR)

ftlECOPl Walston &Co. Inc Members New YOk Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND OVERSEAS -. TABELL'S MARKET LETTER June 22, 1962 T!J.e Dow-Jones Industrials declined below the May 29th intra-day low of 553.75 to a low of 537.56. Volume was well below that of May 28th and May 29th. It is not unusual action to have the market drift somewhat lower after the initial rally follow- ing a selling climax. This occurred in the 1946 decline which we believe can be com- pared to the present market. Volume reached its high in early Septembe If 1946 but the averages declined to three new lows on falling volume before the ultimate low six weeks later. The final low was 4 below the climax low. There is as yet no signal of a trend change on any of our technical indicators. The — . bl'eadth index-continuesrto..r.each new 10ws.Volume indicators stillremain unfavorable. These will not change until the market loses its downside momentum. However, despite the lack of technical confirmation that the market has reached its low, we buying at this level. Many individual issues have reached their downside technicc' ,-'bJe.tives and the market should be relatively close to its lows. Waiting for a technic- signal could result in paying prices above present levels. Certainly, for the long term investor, the investment odds are more favorable at the moment than in a long time. This letter turned extremely cautious last Auvust, witi- the averages at 725, and suggested a policy of selling on strength because we -cit that the investment odds were relatively unfavorable. The averages were then s 'ling at twenty-four times earnings and even if earnings in 1962 had increased 25 it was difficult to envision the averages selling t.bove 825 or 100 points higher. On the other hand, we had felt for some time that the average, after reaching its high, could return to around the 1956-1957 high of 525-500 before resuming its long term advance. It app- eared that at 725, the investor was risking 200 points 10sooilOO points gain. The present market decline has radically th iet en the downside, it is possible that lowered investor confidence e P.8 10, now sixteen, down to fifteen times earning…i-.arnings on the thlS should be about 35. in mlgot-arop to;P30.- T01S mlght rally from around present levels. —-ur!edin earnings 0 or ilato aftor a u, e ow e risk seems to be 100 points. V,hat is the upside Certainly, an eventual return to the 740 level is a con This would mean at least odds of 2 to 1 , in the investors vo . 're robable that the industrial average might earn 45 by 1967. Cap d w -times earnings, could result in a price level of 950 and bring the favora e n ment odds up to 4 to 1. Certainly the dro prices has resulted in bringing high quality growth issues down to much more easonable prices. In some cases, the decline has brought their pIs ratios back to the average of the past ten years. TUs list consists of ten highest quality growth stocks. The first column is averageI E ratio for the past ten years. The rest is self-explanatory. These issues are now available at near the average 21 ratio of the last ten years after dropping an average of about 50 from their highs. For long term investors interested in growth, these issues represent a most interesting purchase. For those individuals tied up with losses in second or third rate growth issues still selling at high pI E ratios, it would seem sound invest- ment policy to upgrade accounts by switching into the group below. 10 Yr. Avg. 21 – S t o c k – 1959-1961 — High- 30.2 Corning Glass 194 21. 4 .2astman Kodak 136 28.1 Dow 101 22.1 General Slectric 100 20. 9 Hercules owder 53 37.7 IBM 607 26. 6 Minneapolis Honeywell 179 29.4 Minnesota Mining 88 16. 7 Procter & Gamble 102 25.7 Rohm & Haas 195 High v/-s 57.7 41. 4 37. 5 32.4 36.1 82.7 42.3 71.5 39. 8 39.6 Recent Low 112 86 42 56 28 300 76 43 60 73 Recent O/C). -01 S Decline 27.6 51 24.6 41 19.1 49 19. 6 40 17.6 51 38.5 54 21.1 50 28. 5 60 21. 9 42 16. 6 58 This market letter IS not, and undC!t no Circumstances is to be constru((i as, an offer to sell or a sollCltatIon to buy any sccuritles referred to herdn The mformatLOn mIS qg !e.l!ccWrACY or completeness and the furnishing thereof IS not, and under no . . \nc All opInion are subject. to change Without. nobel' Walston &, Co, -rJiIpetruud Asa lPIJI'eJenta- t ereo'- pure ase, sell and may ave an mterest. In the mentioned hcn!ln ThIS market letter to am not as a complete annl),sl Ad(htlOna mformlltIon With tya!Sr.lA!lJi!\!ibH\yCrable, \\ 301

Download PDF

Tabell’s Market Letter – June 25, 1962

Tabell’s Market Letter – June 25, 1962

Tabell's Market Letter - June 25, 1962
View Text Version (OCR)

t '! t. . I MEMO FROM INSTITUTIONAL RESEARCH DEPARTMENT For the long term investor, the investment odds are more favorable at the moment than for some time. Last August, with the Dow-Jones Industrial Average at 725, we turned cautious and suggested a policy of selling on strength because we felt investment odds were relatively unfavorable. The averages were then selling at twenty-four times earnings and the downside risk appeared to be double the chance of upside gain. The presen't market radicl!-l1y'changed ther-pic,t.ure. The averages are now selling around fifteen-times earnings and are at a very .. strong long term support zone in the 525-450 area where the Dow-Jones Industrials held for a year and a half in 1956 and 1957. Thus the down- side rush appears to be relatively small as compared to the possible upside potential over the next several years. Furthermore, the general 1 , lOri ',5' p has carried e,culative.s tdoocwkns.t-hlefthhigeh'iensvt est-o–r ….. has J a ,number of, '- . . '''-.. ..ratios;of the'past ten years. At the recent;,lows, ..— — Business Machine ,Corning.GlaSS ,.Minnesota-Mining'& Manufactunng, Minneapolis Roneywe 11 and Du Pont fall lnto thlS category. . The yield is low on the above issues but if the investor is looking .for income, stocks of the quality of General Motors, Standard Oil of New International Harvester, American Can and Allied Chemlcal are Yleldlng around 5. In the business man's risk category, issues like International Minerals & Chemicals, Cluett Peabody, Chrys ler, Kerr-McGee and Dumond National appear most attractlve for long term capital appreciatlon. June 25, 1962 EmruND W. TABELL VICE-PRESIDENT WALSTON & CO., INC. , ,l \

Download PDF

Tabell’s Market Letter – June 29, 1962

Tabell’s Market Letter – June 29, 1962

Tabell's Market Letter - June 29, 1962
View Text Version (OCR)

– fiLE copy—– —. –,—- ———. 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 June 29th, 1962 en July 15th, 1960, when the Dow-Jones Industrial Average was selling around 630, this letter made a long-range forecast. We said, Believe that the market needs a lengthy consolida ting period. Ey lengthy, we mean a period of several years. In terms of the Industrial Average, it is entirely possible that the 700-750 area will be the upper limit. and the 550-500 level will be the lower limit. ever the next three to five years, the market may traverse this whole range several times. Tow, two years later, we see no reason to change the forecast. The average reached ,the upper limit oC the,.r;ing,ein ',TovembeL1961 at '- — the lower limit of the range at this week's low of 524.55 at a pace a bit more rapid than we expected. In our opinion, the market is in a buying area in the lower limit of the long term range. The next important move will be toward the upper limits. We continue to believe that the average will hold in a wide trading range for some time to come but, contrary to general opinion, the volume of trading will be heavy. Listen below are a number of special situations that appear attractive at current levels. Armstrong Rubber (33) is a replacement-tire company with 67 of sales to Sears, Roebuck. Sears owns 12 of Armstrong stock. A major plant expansion in California should result in increased profits. The 1962 high was 47. Beaunit lVIills (23) is selling under ten times earnings and yields 50/0. Develop- ment of new rayon and chemical fibers and expansion of fabric output reduces depend- ence on rayon tire cord. Cluett, eabody's (38) expanding operations in Arrow furnishings and entrance into the retail field plus the potentials of Clupak, the extensiblePer,offerintereSting possibilities. Stock is selling at about twelve times and sold &.tas high as 52 earlier this year. Collins & Aikman (25) earned in the Ma e a record. The com- . pany has broadened its product line and 600/0Of recent sales were In products anticipated. Diamond National (43) \). arnings of over 3. 00 are now derives 700/0 of sales from packaging products with mat e for most of the remainder. Aggressive new ma g 0 r lt in continued growth in sales and earnings. .2;lectric S ould be helped by high replacement battery volume n us batteries. Earnings should approach 4.00 a share. Re8earch activities 1 el cell field have promising longer range potentials. Stock reached a high of 7 960. International Minerals & Chemical. (38) Completion of the large potash mine and plant in Saskatchewan should contribute appreciably to sales and earnings in 1963 and in later years. Selling at fourteen times earnings and yielding over 4, the stock has considerable attraction for capital appreciation. The 1962 high was 57. Kerr Mc8ee (26) is a fully-integrated oil company with increasing natural gas interests. In addition to contract drilling, it has important interests in uranium. Contracts with A.d.C extend through 1966. Also has interests in helium and potash de- velopments. arnings for fiscal year ending June 30th are estimated at 2.60-2.70 a share with substantial improvement over this level expected for 1962-3. J. Ray McDermott (22) conductscthe largest marine oil field construction bus- iness in the Gulf Coast area and has extended operations to foreign countries. Also explores and develops oil and natural gas properties. Earnings for the twelve months ending March, 1962 equalled 2.78. The stock appears undervalued. North American Aviation (57) is a leading contractor of modern weapons and space systems. It is, in our opinion, the most attractive aerospace issue. It is available at 13. 3 times earnings of 4.30 a share, estimated for 1962. J. Stevens (31) is one of the more important manufacturers of textiles. Ex- pansion and diversification have enlarged the sales and earnings base and at present levels, the stock is selling at 8.3 times estimated earnings of 3.70 for 1962 to yield 4.80/0. Book value on Cctober 31st, 1961 was 56.44 a share. In our opinion, the stock has an outstanding capital gains potential. TlPtAmd.J,lndeTIfJ'l!qtTCJIOtnnccs IS to be construed as, nn offer to sell or a sohcltatlOn to or completeness and the furnishing thereof IS not, II.nd under tlPbe -.41.2n by WAlston & k … U1UJ'Wiiradones All l;\fiwsi9lp. of opinion arc subJect to chanltC wLthout notice Walston & aid.Op.ytNte an mtel'elt In the' securitIes mentioned herem. This mll.rket letfilV.M..ihladbLaili mformll.l on day to day ffill.rket news II.nd not as II. complete analysls AddltlOnal mformation '\\,Ith respect to any SeC1LrltiCS referrc furmehcd upon r e q u e s t ' !thlll,(ormll.tlOn and to herem '\\,ilJ be \\'N J01

Download PDF