Tabell’s Market Letter – November 02, 1962

I FILE COpy Walston &Co. ——–lnc——— Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CH,iCAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER Last week's market action was constructive. November 2, 1962 The Dow-Jones Industrials penetrated a downtrend line which had been in effect since August, following similar action by the Rail average in the week previous. Although some supply in the Industrials may be encountered in the 600-620 area, an eventual upside penetration is expected and this letter continues to maintain the optimistic attitude toward the market that we have indicated over the past month. The stock market is a highly complex business but, paradoxically, the best answer toa question is often the simplest one. One reason !e tend to favor new buying of stocks at this time one that th;yare' cheaperthanlIJ.-e)i'nave- -De en- ,,- in some time. Thus, the following table which shows pricel earnings ratios at their bull market highs, currently, and at recent lows for America's 35 largest publicly held In- dustrial companies is instructive. Thirty-three of the 35 companies are now selling below their peak ratios indicating that the bear market adjustment has been as much as any- thing else, a change in investor confidence rather than a change in the fundamentals. It is interesting to note that at their highs, 4 of the companies were selling above 40 times earnings, 8 above 30 times earnings and 17 above 20 times earnings. Only 9 of the com- panies could have been bought at their peaks, at less than a 15 multiple. Now, on the other hand, 24 of America's 35 largest companies can be bought under 15 times earnings with only 5 of the stocks above a 20 pI E and only 1 selling at more than 30 times ear ning! . General Motors Stand. Oil of N. J. Ford Motor General Electric Socony Mobil Oil Price 55 53 42 68 52 High 59 69 59 100 66 Date 1959 1957 1961 1959 1956 High 1962 pIE Ratio pIE Ratio Low At Low GEt\\\19.3 17.4 15A 40 11. 9 W 1).9 6 '8.5 .0 11. 6 35 9.3 pIE Ratio Now 12.2 1'1 13.9 10 9.8 I'l- 22.6 Ue 10.9 , Gulf Oil Swift &Co. 34 34 0' 13.4 31 32 10.3 11. 6 11. 3 12.3 DuPont, Chrysler Corp. 5 2 955 31. 3 8.9 165 39 17.9 7.8 23.9 12.4 General Dynamics 1957 14.4 20 4.4 5.6 Stand. Oil of Calif. 62 1959 15.5 40 9.5 12.4 Bethlehem Steel 9 59 1959 24.2 27 13.5 14.5 Stand. Oil of Indiana 41 65 1956 15.4 35 8.6 9.3 Westinghouse Elec. Shell Oil 28 65 1960 32 47 1961 29.3 20.3 25 29 16.7 11. 4 18.7 12.5 Boeing Co. 38 65 1956 13.5 23 7.5 12.4 National Dairy 52 79 1961 22.5 46 12.4 14.0 Armour & Co. 34 57 1962 21. 5 32 12.1 12.8 Intern'l Business Mach. 352 Intern'lHarvester 46 Union Carbide 96 607 1961 57 1959 151 1959 66. 1 10.1 26.5 300 38 83 28. 6 11.2 15.8 33. 5 11.5 18.3 Proctor & Gamble 63 102 1961 40.0 56 20.4 22.9 Radio Corp. 50 78 1960-,- 40 ..4 Goodyear Tlre & R 29 50 1959 21. 8 Lockheed Aircraft 49 53 1962 11. 8 No. Amer. Aviation 64 72 1962 17.6 General Tel. & E1ec. 20 34 1960 33.3 Phillips Petroleum 43 65 1961 19.6 Sinclair Oil Corp. 30 73 1956 12.2 Firestone Tire & R 28 51 1961 22.1 Sperry Rand 11 35 1961 43.2 General Foods 69 108 1961 37.2 Contlt1ental Can 42 60 1958 17.1 ;39 14, 2 25 11. 4 35 7.8 38 9.3 18 15.7 42 12.5 29 11. 2 25 11. 1 10 11.8 58 19.0 31 14.0 13.2 10.9 15.6 17.4 12.8 11. 5 12.4 12.9 22.6 12.7 D-J Ind.604. 58 1960 Low D-.J Rajl S 122.51 ANTHONY W. TABELL WALSTON & CO. INC. ThiS market letter is not, and under no t'lrcumstRnees is to be construed as, an offer to or a sohcltation to buy any lIecurltles referred to nereln, The Information conttuned herein 18 not as to accurnc or completeness and the furnishing thereof IS not, and under no circumlltanees III to be construed all, II. representn. tlOn by Wai!;ton & Co, Inc All clCpressions of opinIOn arE subject to change Without notice, Walston &; Co. Inc., and Officers, Directors, Stockholders and l'mplo'eetj tneroof, purchase, soil and mny ha\e nn Interest In the seeurltlcs mentIOned herein ThiS market letter IS mtended and presented merely as a general. Informal commentary on day to day market neWS and not as a complete annlysls Additional mformation With respect to any secUrities referred to herein Will be furmsnf'(1 uJ)n request TN 301