Viewing Month: September 1962

Tabell’s Market Letter – September 07, 1962

Tabell’s Market Letter – September 07, 1962

Tabell's Market Letter - September 07, 1962
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Walston &Co. Inc. — Members New York Stock Exchange FILE COpy NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHlCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER September 7, 1962 The Dow-Jones Industrials sold off in the early part of last week before a rally late Thursday reversed the trend. The low reached was 594.08 on Thursday. \At the moment, it is rather difficult to get too pessimistic on the state of the general market. The possibility always remains that the high of 622.02 reached in Aug- ust may be the ultimate high for the post-bear-market rally. However, before a decline of any magnitude is indicated, a distributional top will have to form at around current levels – say, between 590 and 620. No distribution of this nature has as yet taken place it iS,best to regard .the c01.structively.LIndivid1!al patterns would still indicate that a-rise to the 630 650-ievei is the of -0 possibility. Meanwhile, portfolio transactions should concentrate on an attempt to upgrade accounts and switch out of less favorably situated stocks. In this connection, a number of securities which continue on our recommended list appear attractive for various purposes For conservative accounts interested in income and moderate growth, Mesabi Trust llU2;J which provides a current yield of 4.10/0, seems interesting. This letter originally recom- mended its predecessor stock, the Mesabi Iron Company, at considerably lower levels as a speculation on eventual dissolution of the company and formation of a royalty trust. Now that this change has taken place, the character of the security has completely changed, and it becomes a highgrade income stock with fair long-term appreciation possibilities. Currently, the holder of the trust certificates owns a beneficial interest in deposits of magnetic taccnite, which are being mined by Reserve Mining Company (jointly owned by Armco and Republic Steel). The sole income of the trust is royalty payments by Rese rYe on a per-ton basis with various escalation clauses. The makes a de- cline in output, despite the low steel operating rate'(iWllik l, capacity will be increased over the next few years so that the of 47 could be almost doubled in the late 1960's. The – 'so-that r a depletion allowance be u.;- (43), now selling near the turns a yield of close to 50/0, d ding range The 2 00 dividend reflnally to be translating sales growth (revenues dub e year ended Apri 6 n arnings improvement Earnings in the fiscal ra.. share vs 2.46, and the July 1962 quarter was ahead of the like 1 rlOd' ull-year earnings for the year to end next April are ex- pected to approximat to 4.50 This growth has been accomplished largely by in- creasing sales of s ty products such as Weldwood panelling and other branded mer- chandise carrying higher profit margins than raw plywood, which accounts for about 400/. of sales and has been the subJect of chaotic industry pricing. One such product announced this week is a pre-fabricated wood siding covered with a permanent plastic film manufac- tured by DuPont. This film provides a permanent color without the necessity for painting. Capital and sales promotion outlays in order to penetrate the lucrative consumer market have been high in recent years, but have been financed by heavy cash flow which ran to 6 96 a share in 1961 After holding in the 20-24 range for most of the Summer, J Ray McDermott (25) broke out on the upside this week to reach a high of 26 5/8. ThiS action would appear to reflect the record backlog oLconstruction contracts which should maintain the compap.y's earnings at around or better than the 2. 78 earned in the year ended March 31,1962. McDermott is the leading factor in the construction of fixed offshore drilling platforms, and the recent awarding of a record number of leases for the offshore area assures a continued high level of activity for the company. A 70 million Persian Gulf contract will also stimulate 1962-1963 revenues The savings and loan tax situatlOn is still not certain. The Bill which passed the Senate this week provides for an effective 260/0 tax on these organizations, whereas the House version provides for a 20 8 rate The difference will probably be worked out in Committee, but as pointed out two weeks ago. neither prospect should seriously alter the attractiveness of these shares. ANTHONY W. TABELL Dow-Jones Inq. – 6,QQ Donr JOPQ. Ralls 44 4 WALSTON & CO. INC. Thill market letter 18 not. and under no clrcumswncf!S . to be construed 8S an offer to s(!U or a sohcitahon to buy any securlbes leferred to herein The Information contained herein I not guaranteed II..!! to accuracy or completeness and the furnl8hIng thereof not. and under no ClrCUmt'tances IS to be construed 88, a representa- tiOn by Waillton I Co. Inc All expresslOnB of opInion art! subject to chanle \\.lthout notice Wal8ton I Co. Inc. Ilnd Oft'l(ers, DIrectors, Stockholders and t;mp!oyces thereof, purchase, Bell and may have an mterest an the securities mentlone! herein ThiS mru-ket letter IS mtended and presented merely lUI a general. mformal commentary on day to day market neW!! and not IIoS a complete analYSIS Additional informatIon With respect to flny securities referred to herem will be turmflhed uJl1m r e q u e s t . ' WN 301

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Tabell’s Market Letter – September 14, 1962

Tabell’s Market Letter – September 14, 1962

Tabell's Market Letter - September 14, 1962
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FILE COpy I Walston &Co.———lnc ——–Members New York Stock Exchange NEW YORK ,sAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFfiCES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER September 14, 1962 INTERNATIONAL MINERALS & CHEMICAL CORP. Current Price Current Dividend 47 1. 60 Some twenty-one months ago this letter suggested the purchase of International Minerals & Current Yield 3 40/0 Chemical at the then current price of 32. At that Long Term Debt 4 Cum. Pfd. Stock Common Stock —- — Sales -1961-62 56, 289, 316 98,330 shs 2, 642, 841 shs 149,000,000 time, the Dow-Jones Industrial average was around its present price. IGL, of course, today selling at 47, has performed considerably better , verage-ov.er – reason to suspect that it will not continue to do so Earned Per Sh. 1961-62 3. 04 This thought is occasioned by the fact that Mkt. Range 1962-61 57 – 34 the writer has spent the past two days, along with other representatives of the financial community, touring IGL's potash mme and refinery at Esterhazy, Saskatchewan The tour was most impressive Sinking the 3, 378-foot shaft was probably the most difficult mining project ever completed in the Western Hemisphere The exact contribution that the project will ultimately be able to make to IGL's per-share earnings is difficult to calculate, but the company has stated it has a target of an average 100/0 annual return on its 40 million in- vestment in the project. This would approximate 1. 50 per share, or a 500/0 earnings in- crease from this source alone The above figure, however, should only be a rough guide as such complexities as tax exmptlOns, etc. , must be considered. It should also be noted that eventual completion of a second shaft should double output. There has been a great deal of talk in financial hazy, and other major potash projects now scheduled, w Ii the impact that Ester tee volatile supply- demand situation in this commodity. This talk has 0 b s t Esterhazy would be able to sell its full output and, (b) that the price asPta i main stable. Manage- ment has some persuasive arguments to thl si nting out, first of all, that na se- – Ester!1aZ'y has tura(inarkets-which, dueC —Hon – other factors, ftiiione can-be serve, and secondly, that the new e 1 uced gradually over the next few years so that impact on While the Ester azy j i lmportant, lt should be fitted into the over-all Internation IGL is, basically, a company serving agricul- ture. To fully des' s potentlal, the overworked term, growth industry must be applied gn e of the world population explosion is familiar to everyone. It lS patently apparent food production must grow sharply and that more intensive fertilization must t place. IGL's position for supplying basic fertilizer ingredients in world markets is unique. There are three major elements of plant nutrition nitrogen, phosphorus and po- tassium, the only commercial source of the la tter bemg potash IGL has long been a ma- Jor producer of the last two commodities, producing potash from leased deposits at Carls bad, New Mexlco, and phosphate rock in Florida A recently announced joint venture with Northern Natural Gas will put the company in a position to market a-nhydrous ammonia, a major source of nitrogen, and thus give it a position in all three basic fertilizer elements Since fertilizer, as pointed out above, is a bulk commodity, the company's position in regard to shipping points is also interesting. It will be shlpping potash from both Ester hazy and Carlsbad. It is nOw shipping phosphate from Florida, and is a partner with Fren h interests in a West Africa phosphate mine. 'Eventual shipmeh-t from this point would 'open additional markets Putting all this together, he company has pointed out that they will be able to compete in every major market of the world outside the communist block Over the near-term, desplte a projected lower first half, the company's earnings should show a reasonably good increase over the 3.04 earned in the year ended June 30, 1962 The techmcal pattern of the stock has not been destroyed by the recent market bre and indicates considerably higher levels over the long term. We continue to feel that IGL is one of the better growth opportunities presently available Dow-Jones Ind 605 84 Dow-Jones Rails 121 23 ANTHONY W. TABELL WALSTON & CO. INC. ThiS mark'!t letter IS not, and under no CirCumstances 19 to be construed as an offer to sell or a soliCitation to buy any referred to herein The mformatlon ('ont.8\o&l herem 19 not guaranteed as to accuracy or completeness and the furnlshmg thereof 19 not. and under no cIrcumstances IS to be construed 8S, B reprcsenta tlOn by Waiston & Co, Jnc All e'O(pressH;mfl of opiniOn are subJect to change without notIce. Walston & Co, Inc, Bnd OffIcers, Directors, Stockholders and Eml)Joylell thereof, Ilurchasc, sclland may ha.e nn Interest In the- secUrities mentiOned herein ThiS market letter 18 mtended and presented merely as a general. mrormal commentnry on day to day market n,' \5 and not as a complete Additional lllformatlOn With respect to any Securities referred to herem Will be furnished upon r e q u e s t ' \\'N 301 – \

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Tabell’s Market Letter – September 21, 1962

Tabell’s Market Letter – September 21, 1962

Tabell's Market Letter - September 21, 1962
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FILE COPY Walston &CO. —-Inc —– Members N 810 York Stock EXchange NEW YORK 51', FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER september 21, 1962 After advancing for nine out of ten sessions, the Dow-Jones Industrials dropped off sha rply on Thursday and Friday of this week, and Friday's low of 589.52 penetrated on the downside the narrow range in which the market had held for the past 26 trading days. During the late advance, our short-term breadth index turned increasingly sluggish and the low in the averages was preceded on Thursday by a new low in breadth. Despite this somewhat disappointing action, it is worthwhile at this time to repeat a paragraph which appeared in this letter two weeks ago. the momenJ, difficult to get too.pessimistic.on eral market. The possibility always remains that the high of 622.02 reached in A-ugust —- may be the ultimate high for the post-bear-market rally. However, before a decline of any magnitude is indicated, a distributional top will have to form at around current levels say, between 590 and 620. No distribution of this nature has as yet taken place and until it does take place, it is best to regard the market constructively. Despite the desultory action of the market in the past two weeks, the same para- graph applies with equal force today, for in the past two weeks no real distribution of any magnitude has taken place. A maJor decline at this time and from these levels,therefore,'-' appears to be a remote possibility. All this talk of the averages is, of course, the easy way of looking at the stock market. Much more difficult and complex, but infinitely more rewarding, is the study of a large number of individual issues and industry groups. Such a study reveals an interest ing diversity. As everyone remotely familiar with the technical behavior of stocks is aware, a decline in a stock is followed by a period of accumulation or formation of a base which, in turn, is followed by an upward move. Since in the Spring of this year they were, at the begmnin of t S almost uniformly r,Oall on an equal foot- ing. Behavior since then, however, has differed e.!Jj 0 s o a v e formed no bases at all. Others have formed fairly substantial but e still not broken out of these-trading ranges–Yet others 'h ding-ranges-on-the-ups-ide; -. but still have upside objectives rr evels. The great majority of stocks appear to fall in the latter t c r' minority have already reached the upside objectives outlined b e two months. Furthermore, thO a ' us b set within the context of longer-term patterns. A great many sto s w ow their 1960 lows in May and June of this year, and in some of th ssible that the present rallying phase, or any future rally, constitutes 0 a r ery in a major downtrend which will bring them to eventual levels below their Ma ne bottoms. On the other hand, in the case of those stocks whic held above their 19 lows, the current rally may, in many cases, be regarded as the first phase of a long-term uptrend. As always, it becomes more profitable to look at these individual patterns than at the averages. One individual pattern which appears partlcularly interesting at this time is that of Schlumberger, Ltd. (62). It entered our recommended list when it absorbed Daystrom, which we had suggested for purchase some years ago. Schlumberger is an extremely in- teresting company. Somewhat more than half its revenues are derived from oil field ser- vices, including Wire Logging, Perforatlng and Core Sampling. Based on major drilling programs now scheduled, this segment-of the business should continue to exhibit good growth, but perhaps the most mteresting potential lies in diversificati().!! into electronic ins trume nta tion. The acquisition of Daystrom was a logical step in thisdiversification, as was the purchase a year ago of two French instrumentation companies. The company recently reported earnings for the first six months had risen to 1. 83 vs. 1. 50 in 1961. For the full year, net may run as high as 4.00 a share, with improvement expected in 1963. Yield is small, but the stock is of investment quality and appears to be an attract- ive purchase in growth accounts. Dow-Jones Ind. 591. 78 Dow-Jones Rails 117.79 ANTHONY W. TABELL WALSTON & CO. INC. ThiS market is not, and under no Circumstances 18 to be construed 88. an ffer to sell or a soliCitatIOn to buy any secUrities rc!erred to herein The information contained herem IS not M to accuracy or completeness and the urnlshlllj;!' thereof IS not, and under no Circumstances IS to be construed as, a representa- lion by Walston '- Co, Inc All expreSSIOns of Opinion are subJect to chanp;e WIthout notice Walston & Co, Inc, and Qfflcel'1l. Directors, Stockholders and Employees thercof, purchase, sellllnd mny have an mten!5t In the securities mentIoned ThiS market letter 19 intended and presented merely as a general, mformal commentnry on day to day market newlI and not as a complete AdditIonal mformatlon With respect to any securities -referred to herem will be rurnlshed upon request V. N J01

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Tabell’s Market Letter – September 28, 1962

Tabell’s Market Letter – September 28, 1962

Tabell's Market Letter - September 28, 1962
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– FILE COpy Wdlston &Co. – Inc – – – – – Members N e, York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHJCAGO OJFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER September 28, 1962 On my return from a trip to the West Coast, I find that dunng the past two weeks bearishness in financial circles has increased sharply. The result has been a dechne to 572.16 in the Dow-Jones Industrial average, a 51 retracement of the 97-point advance from the June low of 524.55 to the August high of 622.02. General opmion seems to be that a test of the May-June lows is imminent and that the odds favor a downside penetra- tion to new lows. Is subh pessimism justified As far as the economic outlook is concerned, business has been in an extremely !pild .lows of earJ.Y 19..L….The.chances ar. that this.mild ree0Y.EY wil! continue to December and be followed by an equally mild- decline with tlie formatIon of -it saucer-type bottom in 1963. Earnings on the Dow-Jones Industrial average for 1962 wIll be around 35 or 36. Earnings for 1963 will probably be about the same as 1962,althougli the quarter to quarter comparisons will be different. This is hardly the background for a broad market advance, but neither is it the background for a further steep decline after a 30 drop in the averages from the 1961 high to the 1962 low. In 1961, the Industrial averages were selling at twenty-four times earnings and were sharply overvalued. The present level of roughly seventeen times earnings is still high on a historical baSIS. However, today's earnings are of higher quality than ten years ago and it is doubtful that the low PiE ratios existing in the early 1950's will be repeated again. A level of around fifteen times earmngs is probably about a downside floor. The market was selling around fifteen times earnings at the year's low of 525. On the technical side, there are several points that might be mentioned (1) – The stock market made a maJor top in 1961 at 741. 30 in the Industrial aver- age. This high will not be penetrated for a long time to 1965. not until 1964 or 0 (2) – The decline from the 1961 top to the 0 5 .5 a decline of 29. This has been the steepest decline since the 1937 d . 0 e ive years ago. The rr!!t support aj; approximate technical downside obJective 0 956 . . 5.254 also p pat formed in 1961 and earlyl962. If there is a downside penetratlOn w,' 1, in our opinion, be minor in nature. The probabillties (3) – If the two ove i a major bottom in 1962. the market will remain in a wide trading area for a long time 0 c u low the pattern of 1946-1949 when the Industrial average fluctuate r 32 months. The price swings could be somewhat wider and the time d s what shorter, however. The probabilities favor 550-525 as the lower limits ange, and 650-675 as the upper limits. (4) – This b trading area will eventually turn out to be an accumulation base that will result in a price level considerably above the 1961 highs. It will be an extremely trymg period. Many stocks will reach new lows during this basing out process. In 1946- 1949, the Industrial average did not break the initial low of October, 1946, but during the next thirty-two months, forty-eight of the fifty-five Standard & Poor's industry groups made new lows. Selectivity will be of pnme Importance. Many stocks have reached their lows of the accumulation pattern. Many others will reach new lows before they start their own accumulation patterns. (5) – The upside objective of the May-June base was 620-650. The lower part of this range was reached at 622.02 in August. The downside penetration of the 620-600 are suggests a declme to 580-550. If the.decline holds inthisarea, it wdtild indicate a broade ing of the potenhal base pattern and an objective above the August high. (6) – It must be remembered that long-term accumulation patterns with stocks passing from weaker holders to stronger investment holders are built up against a back- ground of pessimism and gloom and lack of speculative enthusiasm. In contrast, long-ter distributional patterns like 1961, With stocks passing from investment holders to weaker short-term speculative holders, are built up against a background of enthusiasm and opti- mism and speculative excesses. It takes a long and trying time period for these patterns to form during which the investor must follow a basic objective. In 1961, this letter sug- gested a basic objective of selling on strength. In this present period, we suggest a basic policy of buying selected issues on weakness. Dow-Jones Ind. 578.98 Dow-Jones Rails 115. 68 EDMUND W. TABELL WALSTON & CO. INC. Thl'l mnrket letter IS not, and under no cilCllmSwnces IS to be construed 8S. an offer to sell or l\ soliCitation to buy any securities referred to hereIn. The information contained herem lS not Rua.ranteed as to accuracy or completeness and the furnlshlnl'! thereof IS not, and under no Circumstances \s to be construed 88, a representa- tIOn by WnLston & Co, Inc All expreSSIOns or opInion are subJect to ChalH!;e WIthout notice Wnlston & Co, Inc, and Officers, DITC(!tOrB, Stockholders and Employee, thereof, purchru;e, sell nnd may have an mterest In the securities mentioned herem ThIS market letter is Intended a.nd presented merely as a general. Informal commentary on dny to day market news and not as a complete 8ona1Y61'1 AdditIonal mformatlOn ' Ith respect to any referred to herein Will be furnished upon r e q u e s t . ' WN 301

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