Viewing Month: October 1962

Tabell’s Market Letter – October 05, 1962

Tabell’s Market Letter – October 05, 1962

Tabell's Market Letter - October 05, 1962
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FILE COpy Walston &Co. Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CH,lCAGO ,i TABELL'S MARKET LETTER OFFICES COAST TO COAST AND OVERseAS October 5, 1962 The market is in the middle of a four-month trading area between 525 and 625 in i the Dow-Jones Industrials. There is little technical indication of a move out of this tra- ding area in either direction in the immediate future. The base pattern formed in May- , June indicated a possible advance to 615-650. The lower part of this upside objective was , reached at the August high of 622.02. The downside penetration of the August-September range between 620 and 600 indicates a possible decline to the 580-545 area. This week's' intra-day low was 569.23. The decline has broadened the long-term potential base pat- tern buLproba,plijT-IDore.time is,neededbefore a.broad,mgjor ,upward ,moye Such a move would be indicated 'by the'breadth index shmving better ilc'tion thardhe 'av'er–' ages, and this is not the situation at the moment. However, for the nearer term, the mar ket appeared oversold at the week's low and a rally back to 600-620 is probable. Breadth action must be observed closely if such a rally occurs. The market is in the tedious process of forming a long-term base, During the period, stocks should be bought on weakness. This particularly applies to individual' issues and groups that appear attractive for the longer term on both a fundamental and technical basis. In our opinion, the aluminum issues fall into this category. Late in September, price reductions on some fabricated aluminum products y.'as , announced. This action brought list prices down to the actual level of prices at which fa- bricated goods have sold in recent months. Considering the strong statistical position ,of the industry, this action came as a surprise. August stocks of primary metals in hands of producers were at an 18-month low in August, and current ingot production is esti- mated at 85 – 90 of capacity. Aluminum stocks sold off sharply on the announcement, as shown in the table below May-June Low Au ust i h \Wek9s Low Last Aluminium, Ltd. 17 1/2 /8 20 1/8 Aluminum Co. of Amer. 45 – Aluminum''- '-25- 1\ 51 1/ 8 53 1/4 -. ,' I , 1961-rise They were time haVE decli wei2J; w. et leaders of part 1949 issues and had fantastic'price rises. The in the 1956-1959 period, and since that i '1 his price action is noted in the table below' r.ow-1949 -. Alumimum, t 7 Alummum fAmeI'. 12 . Kaiser Aluminum ,, -Reynolds Metals 2 2 High 1956-59 53 133 70 80 Low-1961 171/2 45 25 20 1/2 Last 20 1/8 531/4 32 1/4 23 7/8 1, The alummum stocks have been in a bear market from three to six ,years. They I have, had a three-wave declme and appear, from a techmcal vi!,!wpoint, to be in the pro- Ii cess of form' ing an accumulation base prior to a major price advance. This hts in with I the fundamental background for the alummum industry. The main difficulty of the past several y'ears has been over-capacity and lowered profit margins. New uses for aluminurr j which could open up new markets and displace other materials in existing markets, could i result m sharply higher sales and earnings in the next five years. We believe this group , is an attractive long-term purchase at present price levels. Aii four issues appeaf' at- I tractive. If we were to plCk one issue, it would be Reynolds Metals, which is part of , our recommended list. – ,,, The mulation aluminums appear to be We believe taking at a relatively advanced a tax loss in issues with stage of a mediocre long-term accuprice potentials – , over the mtermediate-term and SWitching mto aluminums would be a wise investment . I procedure. There are several issues in our recommended list that fall into this category '\ and we adVise switching BendiX, Consohdated Mining, Goodrich, Johns Manville, Pitts- ,, burgh plate Glass, Pullman and United Shoe Machinery into the aluminums. Dow-Jones Dow-Jones Ind. Ralls 586.59 116.36 EDMUND W. TABELL WALSTON & I k lett('r IS not nnd under no to he con'llruP1 as. an offer to. sell or n solICitatIon to buy any lIecurlties referred to herem The informatlon not fL.'; to accuracY or lomplctenes'l and the furnishlnll thereof 1'1 not and under no Circumstances IS to h WI & Co In(' All C'lpre'l'l)nns or n\lInl(m are suhJC'Ct to chanl!e Without notIce Walston & Co, Inc. Bnd Officers, Irectors, c 0 en an y II Rton f nnd may have an u\ter(''It, In the 'If''Curlt.lCl mentioned herein ThiS market letter 1'1 Intended and preaented merely as II genernl. on day to day market new'l and not as B complete nnnlysis Additional InformatIOn With respect to referred to herem \ t r ,t , I !

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Tabell’s Market Letter – October 12, 1962

Tabell’s Market Letter – October 12, 1962

Tabell's Market Letter - October 12, 1962
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FILECOMV W—a-lsttnocn.&–C-o-. Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CI-UCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER October 12, 1962 Gloom and pessimism is rampant, but there is little change in the actual technical market pattern. The indications continue that we are in the long tedious process of forming a long-term base, and this requires downside price movement along with upside. From a shorter term point of view, ability of the Dow Industrials to move above 600 would indicate a further extension of the advance from the June lows. A decline below 570 would indicate a return to the 550-525 level which we consider a long-term buying area. CLUETT, PEABODY & CO. INC. Current Price Current Dividend -E Current Yield -, 1. 65 3.7 – It is a stock market axiom that the whole is usually worth considerably less than the sum of its parts, but in the case of Cluett, Long-Term Debt 6,302,278 Peabody, the present discount from a realis- 7 Cum. Pfd. 22,566 shs. tic valuation of the divisions taken separately 4 Cum. 2nd Pfd. 4, 186 shs. appears to be rather excessive. Common Stock 1, 985, 658 shs. Any man who has ever worn an Arrow Sales -1962-E Sales -1961 175,000,000 138,610,000 Earn. Per Sh. 1962-E Earn. Per Sh. 1961 3 40 3.02 I shirt is familiar with Cluett's basic clothing business. It is a business which, while hardly glamorous, appears to be an attractive and expanding operation. Cluett has expanded sales from 97 million in 1958 to 13B million Market Range 1962-61 531/2 – 3a 1/2 in 1961. In the same period,pre-tax income from sales million to 11 1/2 million, and profit margins have roug 0 from under 4 .Further growth is foreseen as Cluett is adding considerably to its baaie 0 r ishings and, in an effort .e ''''otect and expand its markets, has en field. The company is t..Apanding into the growing wea arket with a wide line of Lady-Arrow shirts'a;nd -blouses ue 0 he'black-,on'the'women's wear operation for the first time this ye , e s are expected tQ increase to 175 million, and although . to entrance into the retail ff.eld, pre- tax income inc ase t . 5 iIadh; . Entirely s p censing of the sa any's production and retail operations is its liized Plus trademarks. Sanforized provides technical services for 141 li es 1 countries and royalty income after applicable expenses has increased in r since 1953 and should continue to increase at approximately a 6/. growth rate. \lI'Or 1962, it is estimated at some 3.75 million before taxes. Let us now assume that the clothing manufacturing and retailing operations of Cluett should be valued at a conservative rate of 12 times 1962 earnings. Let us more- over apply a 20 PiE ratio to the high-grade royalty income which requires little or nothing in the way of production facilities and investment and which, in a sense, provides an annuity for Cluett. After adding these two valuations and subtracting debt, preferred stock and minority interest, we arrive at a total valuation for the common equity of around 46 a share or, just about what Cluett sells for today. Why, then, get excited about a stock which appears to be only fairly valued The answer is that we have not taken into account the company's 50 owned Clupak, Inc. which licenses a unique process for the production of extensible paper. The potentials inherent in the Clupak process are staggering. In 1961, total tonnage of Clupak paper produced was 38 greater than in 1960. Yet, at the moment, Clupak's penetration of the unbleached Kraft paper market is only B and unbleached Kraft constitutes only one outlet for the process. Cluett is currently involved in litigation concerning the process which should be decided shortly, and a favorable decision could clear the air for sharply expanded licensing. The investor in Cluett at current prices is, therefore, buying an expanding appar- el operation at a slight discount and is paymg absolutely nothing for the tremendous growt inherent in Clupak. From a technical pOint of view, the stock is selling just above strong support at 40-35 and has a shorter-term upsi.de; potential of 55 with much .levels possible over the longe,r-term. The stock, orlgmally suggested at 2B 3/B, 1S agam recom- mended for long-term mvestment. EDMUND W. TABELL Dow-Jones Ind. 586.47 Dow-Jones Rails 11B.04 WALSTON & CO INC .. Thla market letter is not, and under no circumstances i1I to be construed as, an ofter to BeU or a eoitcltatlon to bU) any 6eCurities referred to herein. The information contained heretn ie not guaranteed lUI to aeeUlacy or completeness a.nd the furnishmg thereof Is not, and under no elr-cumstanees ls to be con..t.rued as, a repreaenta- twn by Walston &; Co, Inc. All expressions of opinion are Bubject to change without notice. Walston & Co, Tile., and Oft'lcera, Direct.. .8, Stockholdere and Employees thereof, purchase, &ell and may have an interet in the seeurities menttoned herein. This market letter 18 intended and merely as 8. general, informal commentarY on day to day market news an4 not as a complete analysis. Additional mformatJon with respect to any securities referred to herein will be furnlehed upon request. . WN 301 r or

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Tabell’s Market Letter – October 19, 1962

Tabell’s Market Letter – October 19, 1962

Tabell's Market Letter - October 19, 1962
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fILE COpy , Walston &Co. Inc Members N e1V York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CH.lCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER October 19, 1962 This is a strange business that we are in. In most things of life, people profit from past mistakes and do not repeat them. This is not true of the stock market. Both specula- tors and investors repeat the same mistakes over and over again. This has been going on since tradmg started 10 Wall Street under the Buttonwood Tree on May 17th, 1792. The reason for this irrational behavior is that speculative trading is ruled largely by emotion Two of the basic emotions, greed and fear, are the greatest enemies of stock market succe s One of the few advantages of being a veteran in Wall Street is that you have seen ' 'l!..t Late You mze the show Immedlately, but slowly the characters and plot become'familiar and-You realize that thlS is where you came in twenty or thirty years ago. The same thing in the stock market., The people and the stocks change, but the plot remains the same The market IS prone to move to extremes – – both on the upside and the downside. Regardless of the facts, the market generates the most optimism at the top and the most pessimism at the bottom. Take 1961 as an example. The market in general, and individual stocks in particular, rose to ridiculous helghts, based not on immediate earnings, but on dreamboat future, The inevltable result was a 30 decline in the market averages and a much greater decline in many indlvldual issues. Why did the market' decllne It declined for two reasons. First, because the mar- ket was much too high in the first place and needed a severe correction. The second reason for the 30 drop in pnces was 10 anticipation of a decline in business. At the moment, pessimism and bearishness are in the ascendancy. This is the direct opposite emotional background from 1961. Is the present bearishness Just as un- justified as the bullishness of 1961 We believe It IS. news items in today's Wall Street Journal are part of the s technical opinion,three above conclusion , The first Item points out that the anticipated Most key business indIces are hIgher or the same a b s'n s fia. yet taken place. y, 1 . e second item states -. – by The two other economists saId they Improve throughout 1963. If the 30 drop 10 decline that has not yet occurre , , it,doesnot appearfeas t \ 11 it again if and when'th'e business de- cline occurs. It a e s m ' the market WIll continue to look ahead and dis- count a recovery i pa 1963 . .The third ite s or itself and concerns a statement by Treasury Secretary .illon. He lists a .numb factors condUCIve to business expanslOn, one of which is the orthcoming proposa 0 Congress for a net reductlOn in taxes. In reply to the objection hat tax reduction without a cut in spendmg is not feasible, Mr. DIllon replled Such talk is not realistic. If taken literally, it would mean VIrtually permanent postponement of any ax reduchon. There is no reallstic ros ect for the foreseeable future of reducin Federa e,x endittires below current levels in view of the ur ent and compellin .demands of the cold ar, the space a e, and a rowmg POpulatlOn. From a techmcal vlewpomt, the market IS in a very interesting stage of a time pat- ern. Despite the worse-than-average action of most breadth mdlces at the moment, many of, these indIces Indicate the probabIlity of a turn In the downward trend over the next several weeks. We stated in last week's letter that a decline below the early October mtra day low of 569.23 would mdlcate a return to the 550-525 level. ThIS, if It occurs, would a-long-term buying area;'iri our opinion. Frraay's intra-day low was 570.44. It ts our belief that the low of the market will occur very shortly and it will be fonowed by an advance that WIll carry above the August high of 622.02 by the early part of 1963.1 Dechnes between now and the end of the year will,in our opimon, be the last opportumty to estabhsh a long-term pOSItion before the start of the advance. Dow-Jones Ind. 573,29 Dow -Jones,Rails' 116, 17 EDMUND W. TABELL WALSTON & CO. INC. '1 1101 Rnr) under no IS to he- ('on'ltrucn na, nn offer to ..ell or II '1ohcllnhon to buy any fl(,(,UrLtll;'s referred to herein The InformatIOn rntnined herem nut ,1; t.o acC'urnc) or and thf' furnishing thereof I not, anti under no Circumstance! IS to be construed as, Il represcntll- tmn hy Walston & Co, InC' All c,prCStlron5 of OPInIOn are suhJf'Ct to chan!!c …. Ithout notice. Wnlston &. Co, Inc, and Officers, DIrectors, Swckholders and I'mploye'; IlUlcha;(' and may an interest III the securities meatlonf'ri herein Thl !nrkct letter If! Intended and presented merely as a general, Informal commentary on day to oa) market ne…. s and not. as a complete flnnlY;;ls AddItIOnal III (ormatIOn …. Ith TCpect W any securities referred to herem furnished uptln

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Tabell’s Market Letter – October 26, 1962

Tabell’s Market Letter – October 26, 1962

Tabell's Market Letter - October 26, 1962
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Walston &'Co. fiLE COpy .- 9—\.C,. ,, , , Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST AND OVERSEAS CHICAGO TABELL'S MARKET LETTER October 26, 1962 The intensification of the Cuban situation does not alter the long-term technical pat tern outlined by this letter on innumerable occasions in the past. Since 1959, this letter has expressed the opinion that the market would reach a major top around the 750 level in the early 1960's, and the sequel would be a decline to around the 525 level followed by a long and lengthy consohdation that might last for several years. To express our present opinion, I am repeating a part of the letter of a month ago, September 28th, 1962 – …-' —!..'(1)—. m;tjortop in.19.6Lat.74L 30,in the,.lndusiriaLaver- age. This high will not be penetrated for a long time to com-e -' probably not or 1965. (2) – The decline from the 1961 top to the June low of 524. 55 was a decline of 290/0. This has been the steepest decline since the 1937 decline of twenty-five years ago. The decline met support at the logical level off the 1956-1957 hIgh of 525, which was also the approxima te technical downside objective of the top pattern formed in 1961 and early 1962 If there is a downside penetration of the June low, it will, in our opinion, be minor in nature. The probabilities are that the market made a major bottom in 1962. (3) – If the two above points are correct, the market will remain in a wide trading area for a long time to come. It could follow the pattern of 1946-1949 when the Industrial average fluctuated in a 200/0 range for 32 months. The price swings could be somewhat wider and the time period somewhat shorter, however. The probabilities favor 550-525 as the lower limits of the range, and 650-675 as the upper limits. (4) – This broad trading area will eventually turn out to be an accumulation base that will result in a price level considerably above the 1961 It will be an extremely try- ing period. Many stocks will reach new lows during this b i In 1946-1949, the' Industrial average dId not break the initial low 'TftOc\01 b uring the next 32 months, 48 of the 55 Standard & Poor's industry e s. Selectivity will be ,!pr;ime l\.!any stocis have reached Many others will reach new lows before (5) – The upside objective of 0 th'M- accumulation patterns. . as 620-650, The lower part of this range was reached at 622. gests a decline to 580-550. I e e e penetration of the 620-600 area sugin this area, it would indicate a broaden- ing of the s a Jective above the August high. This week d 49.65 reached on Wednesday. Disturbing news event might bring in eno rv u ing to cause a further mild decline to the 550-500 area, but this would; in ou opi' ,offer an excellent long-term buying opportunity. The events of th st week will have one of three results (l) – An all-out nuclear war. (2) – A compr (3) – An intensification of the cold war and probable Korean- type involvements. The first alternative can be dismissed very quiCkly. It is so utterly fantastic and improbable that any attempt to base an investment policy on such a contingency is outright folly. The second alternative would not greatly alter the present pattern, but It appears unlikely that an acceptable compromIse on all phases of international problems can be arrived at over the nea r -term. The third alternative appears the most likely. If this is the case, it would change the general opinion that the economy will undergo a slight recession early in 1963 .. .at least part of the 290/0 decline in the Dow-Jones Industrials to the June low was In antiCIpa- tion of such a recession, thIS would be a constructive market factor. An intensification of the cold war to a lukewarm war would result in an inventory build-Up and firmer prices and'would be beneficial-to industries with both excess capacity and low profit margInS Such industries w('uld include AIrlines, Aluminums, Chemicals, Machine Tools, Papers and Rails, among other Industries. On the unfavorable side, a tax cut in 1963 would be quite unlikely. . As we stated last week, the market is in a very interesting stage of a time pattern. Despite the worse-than-average action of most breadth indices, the probabilities favor a change in trend of most of these indices in the next several weeks. It continues to be our belief that the low in the market will occur shortly, if it hasn't already occurred,and will be followed by an advance above the August high of 622.02 by the early part of 1963. Declines between now and the end of the year win, in our opimon, be the fast opportunity to establish a long-term position before the start of the advance. Dow-Jones Ind. 569.02 Dow-Jones Rails 118.93 EDMUND W. TABELL WALSTON & CO. INC. Thill market letter IS not. and under no clrcumstnnces IS to be construed as, an offer to sell or a sohCltatlOn to buy any SecUrtties referred to herem The mformatlon contained herem III not guRrant.cro tI.lI to accuracy or completeness and the furnlShlnK thereof IS not, and under no Circumstances is to be construed as, a repre!lenta- tiOn by Wnlston & Co., InC' All expresSiOns of opInion are subject to change Without notice Walston & Co, Inc, and Offlcera, Directors, Stockholders and ;mployees thereof, purchase, sell and may have nn mterest In the securities mentioned herCIn ThIS market letter IS Intended and presented merely as a general, Informal commentary on day to day market news and not 8S 8 complete ana!)sls Additional information With resPCl't to any securities referred to herein '\10111 be furnished UPlln request WN 301

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