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Walston &- Co. Inc IIII NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS 11 TABEll'S MARKET lETTER January 17, 1964 There was practically no change in the leading market averages over the past week, although wide moves in both directions were prevalent. With the Dow-Jones Industrials al- ready in the lower part of the 775-795 objective area suggested by this letter, it is expected that selectivity will increase. Investors should concentrate their attention on securities with a minimum downside risk and good, long term upside potentials such as the one described below. –Current Price . Current Dividend Current Y,eld .'- COPPERWELD STEEL COMPANY d – -42 The combination of -gooa inc6me;plus' .a.-.DOVE – 2 00 a verage capital gains potential, is rarely found 4.80/0 in today's stock market Yet just such a combi- Long Term Debt Common Stock 17,592,000 1,182,754 shs Sales – 1963-E 95,000,000 Earn Per Sh. 1963-E 3 25 nation appears to be available in the common stock of Copperweld Steel The company's current 50 quarterly divi- dend rate proVldes a y,eld of 4.8 at present prices At first glance, the coverage of the 2 0 Price Range, 1964-59 55-263/4 diVldend would appear to be questionable, considering the cyclical nature of the steel indus try What is not apparent on looking at the company's long term earnings record, however, is . that the the Superior Steel DlVision, sold ln 1961, sults for the years 1957-1961 heavily If losses of this div 0 which penalized re- ! the 2 00 ' dividend has been covered 111 every year but one seems to assure at least lts continuance n pre V; heavy cash flow The company's excellent capital from an anticipated increase in basic earning power. As a steel company, 0 rwe earnings wlll no doubt continue -toUuetua-te – a,(\b.y- – – ably higher Before Copperweld's basic business. h increases, let us outline briefly three major divisions. The first, the Aris- toloy Division, to sales, manufactures specialty steels Thirteen per cent of output 0 y er Copperweld diVisions 111 1962 Some 25 of sales are made by the ision WhlCh makes copper clad and aluminum clad rod, Wire and strand perweld and Alumoweld trade names Most of the company's remaining sales are a nted for by the Ohio Seamless Tube Division producing alloy and carbon seamless tubing Two developments in the Wlre and cable divislOn appear to offer promise for in- creasing earnings in the years ahead Strenuous cost-cutting efforts are being made in Copperweld wire production In addition, capacity for Alumoweld should be increased by 50 at the end of 1964 Due to changed economics in the public utility industry, the construc ion of power transmission lines is expanding at a significant rate. Alumoweld is expected to capture an ever increasing segment of this growing market. Moreover, increased production 111 the wire area will not only benefit that division, but also the Aristoloy division Slnce it will be supplying more products internally, thus d8mping cyclical fluctuations. Still more improvement lS scheduled for Aristoloy, however . .The start continuous casting in early 1965 with 300,000 tons of annual capacity. Since this lS less than half the company's total capacity, the equipment can probably be used on a full time basis, and thus maximum savings will be generated. It i difficult to estimate the precise earnings increase that can be expected from all of these improvements. However, a conservative estimate would indicate the possibility of 2.00 per share additional post-tax earnings at present operating rates Were the nationa steel operating rate to increase, earnings improvement could be substantially greater. At the moment the stock is selling at 13 times estimated 1963 earnings of 3. 25. From a technical point of view, the stock has formed a three-year base in the 28-42 area with a present upside obJective of 80,and there is support Just under current levels. I Dow-Jones Ind 7'15.69 Dow-Jones Rails 181. 87 ANTHONY W. TABELL WALSTON & CO. INC. '1111'1 !H!lll(cL lett..n I t. nnn undcl no CllClllllbt,UlC(,; 11 tn he cnllh 111'1111 .\11 Ifel In ell I 11 \11 intw!l tn hll ,Ill 'ccut !lIe I efell cd tn hClcm 1 he m(llIlntlllll OInLnlnc,\ hClcln nul ,.lIIlInntced ,I t UI ,rlIp\ctcfle ,Ind the 1II('I000or I' 1l0l1 nnd IIn,\el n IlLIIIII …lnIHL…. I t Ill' I Oll.,tl lIL'! II, ,I Il'I …..,I.'IIn- lIOIl I,v WnbtOIl & Cu, Inl' All C'ClHclnn., f 111111011 all' ,,hJc,t to Ih.lI1,.1' \\IOWllt nulwc \VlIl.,t,,1l & Co, 1111 ,lIIII OtfH('I….. HII'Lt,,, ,1111 lhcrrof. )Hllchn.,c, …ell ,Inri m.IY hnve 1111 IntClc… t In the CCllllhC'… Illcllt1'dle,1 hC11'11l 'lhl 1IIIuJ.,r 1'I\cl I Intelldc,\ !llIti plccnle,\ mer('iy n., II I ! l ' n l ' l . d / InflJrm,ll Lommcn1.lry Oil dllY to rlny market new., nnd nut LlJmplctc .\fl.1!,.1., Ad'\ltlII.t1 IIIfollllntl,I1 \\Ith I('–pe,t to .Iny C('Ulltll;''' ICrL led lu hCIClI1 hI' fllllll.,het! upun I eI\UCSt. — r \\ … \1'1 Ii'