Viewing Month: May 1964

Tabell’s Market Letter – May 01, 1964

Tabell’s Market Letter – May 01, 1964

Tabell's Market Letter - May 01, 1964
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Walston &Co. Inc Jlrlll/Jer8 Sell' lol'k Stork E.lclial1ge NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST ANO OVERSEAS TABELL'S MARKET LETTER May 1, 1964 The decline fromth'e-Aprtl-l7f1i intra-day high of 831. 63 on the Dow-Jones Industrial average has been comparatively modest so far. Thursday's low was 807.18, or a decline of roughly only 30/0 from the peak. Furthermore, there have been, as yet, no important distri- butional top patterns formed in the averages At the moment, it would appear that 800-790 is the worst downside potential that can be read into the present pattern. At that point, if the decline occurred in the near future, some of our shorter term technical indicators would Ienter oversold territory. The above, of course, applies to the shorter term trend of the general market. From an intermediate term point of view, the downside breakouts of the uptrend channels from the aDecember lo;s in both the price a'nd breadth indic;S reversal-of the- uptrends in' the averages that have been in effect for four to five months. The downside implications are IrI not yet clear. As noted above, the immediate downside objectives are not much below pres- ent levels. However, a rally that failed to move above the April 14th high in both price and breadth would broaden the top and indicate a lower downside obJective. We continue to advo- cate building up a 250/0 cash reserve on strength if you have not already done so. For the longer term, this letter remains very bullish. We continue to believe that the market, in a broad sense, is in a reaccumulation area that will result in considerably higher prices in the latter half of the 1960's. We do not subscribe to the much publici1ed theory that the market must at some time correct the 4000/0 advance from the 1949 low. In our opinion, this has already happened. The decline from the 1961 high of 741 to the 1962 low of 525 was the sharpest decline in the averages in average decline in the thirty stocks in the Dow -Jones Indu i or since 1937. The mO ha tever high was reached in the 1956-1961 period to whatever low i t e 0-1962 period was 450/0 In our opinion, this steep decline in everyone e thlrt ocks in the average (the smallest declines were 240/0 in Texaco and A a ephone) corrected the entire long term advance from the 1949 lows and fu ater rection is not necessary. ,—-We feel that the pattern that will result in a that will result in a much low 20the major tio i 0 ce f.building.up a,major reaccumulation e e 1&E!1 at a later date rather than a major top later date. We do not, however, believe that eted. Probably one more correction is needed to broaden the base t ' . 1vidual stocks. Such a correction, whe n , as and if it occurs, will bear n m to the 1962 debacle. The 1962 decline was the downside climax of a major top ha been built up in individual stocks for a five-year period between 1956 and 196. e possible decline we envision is part of the building of a majJr bottom somewhat similar to the 1946-1949 period in the general market. It probably would not carry much beyond a 100/0 correction in the overall pattern. We have mentioned a one- third to One- half retracement of the advance from the 1962 lows to the 1963 -1964 high as a possible yardstick for the pattern in individual stocks. It would be highly improbable for each stock to reach its low on the same day so the possible downside objective of the aver- ages is vague under this theory, but it would probably be within the confines of 750-675 in the Dow-Jones Industrials. W.e see no indication at the moment of a return to anywhere near the 1962 low of 525. While the above applies to the general market, individual stocks and groups are at various stages of the overall pattern. The oils, for example, have completed their re- accumulation period and are in a major uptrend with still higher levels indicated over the longer term despite the already sizable advance. The rails also have a similar pattern. Other groups, like the airlines, have probably reached their initial upside objectives and need a consolidating period. Other groups like the aluminums, chemicals and papers have already formed sizable potential bases and are near the start of a major advance. Still other groups need a further decline to broaden the bases. The important thing to remember, in our opinion, is that a decline would offer buy- ing opportunities in many issues. EDMUND W. TABELL Dow-Jones Ind. 817.10 WALSTON & CO. INC. Dow-Jones Rails 196. 50 Thn, not, lind unrlet no cirClimstRI1C(!S 1, to he COIl'tl lied 1'1' nn ,,!Tel 11) , n l)hCllntwl1 t 1111 nn)' Idell cd 't ht'lcm The lnrm mntwll ('untained herem IS not no; to UCCUl ncy (J) com)llctenC'; nntl the fill thE'! C(lr nt, an,l untie! flO Uf CUlllst.UH'C i'I til lIc (nn!tl ued Ill! a 1Clll tum hy \\dston &. Co, in'! All c,prCSl\lOn'l of O\JlnlOn me ubJc,t to Ch,lIlj!(' \\Lth.. ut utllC Wai-.tnn & l,,,, 1m an,1 OffICCl…. , DUCLt19 SttLkh,,!,lel .. lind Emlll,wceo; thcl'rof, i'l11cha;c, Rcll nod mlly hllvc IlO Intclc81 In the mentu\Ileti bt.'lcllI 'Ihl !l1lllhct leHel 1I11enticl! ,1I111 melely.1 n Inrurmal cnmmentnry nn to lin m.lthet new III1tI nut II., n c(lmlliete ,II1I1IY-.h A,lIhtmlwl lIlfUlmntH)n \\Ith IC-.)('.'t to .IIIY O-\)('1I11tlCl! lefelle,l to helcm \'0111 he (ut m .. ht'\l lIlIon request \\ \ ,01

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Tabell’s Market Letter – May 05, 1964

Tabell’s Market Letter – May 05, 1964

Tabell's Market Letter - May 05, 1964
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Walston &Co. —-Inc —- Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS EDMUND W. TABELl'S RECOMMENDED LIST QUALITY & LONG TERM GROWTH Amerada Amer. Home P DuPont General Elec. Gulf Oil Close 5/5/64 837/8 661/2 262 821/2 QualComment Close Qual- 5/5/64 !!L Comment A Buy on dips. Norf. & West. 127 3/4 A Buy on dips. A Hold.. Penney,J. C. 517/8 A Hold A Hold Reynolds Tob. 481/4 A Buy on'dips. A Buy at 85-80. RoyalDutch 461/4 A Buy on dips. – -Std. Oil – jo- PRICE APPRECIATION ., Atchison, Top. Close Qual- 5/5/64 2!L Comment 28 3/8 A- Buy on dips. Beaunit Corp. 30 1/2 B Buy on dips. Clark Equip. 48 3/4 A- Buy on dips. Cluett Peabody 50 3/8 B Buy at 50-45 Cansol. Coal 51 3/4 A- Hold Copperweld Steel 50 B Buy, on dips. Denver, Rio G 20 3/8 B Buy at 20-18 Disney, Walt 46 3/8 B Buy on dlpS. Eaton 43 B Hold First Charter F 41 1/4 Buy on dips. Fruehauf Trail. 30 3/a B Buy on dips. Illinois -Central -5-9- 1/4-B-BifyOilaips; Int. Min. Chern. 74 1/4 A- Buy on dips. Kansas City So. 49 1/2 A- Buy on dips. Kerr McGee 41 1/8 A- Hold Korvette, E. J. 29 1/4 B Hold Libbey-Owens 58 3/4 A Hold McDermott, RJ 22 B Hold Midland-Ross 74 5/a B Hold for 92 Close Qual- 5/5/64 ity Newmont Min. 40 1/8 A- No. Amer. Car 29 1/2 A Penn. R. R. 30 1/2 B- Pure Oil 48 1/8 A Rayonier 36 7/8 B Reynolds Met. 39 B Riegel Paper 39 1/8 B Schlumberger 63 3/8 A Scoville Mfg. 35 3/4 B Southern Rwy 63 3/4 B Stevens, J. P. 36 3/4 B -StorerBroad. Sundstrand 21 3/a B Swingline A 34 l/a B Union Bag C 39 7/a B United Fruit 21 B U. S. Plywood 77 1/2 A- Univ. Oil Prod. 34 5/a B Varnado, Inc. 25 5/S Comment Buy on dips. Buy on dips. Buy on dips. Buy on dips. Buy on dips. Buy,on dips. Buy on dips. Buy on dips. Buy on dips. -Buy on dips. Buy at 35 -dips. Buy at 20-1 Buy on dips. Buy on dips. Buy on dips. Hold Buy on dips. Buy on dips. LOW-PRICED SPECULATIVE Close Qual- 5/5/64 Comment Amer. Metal Pr. 21 1/2 B Buy on dips. Amer. Radiator 23 B Buy on dips. Audio Devices .107/a B- Buy on dips. Braniff AirwiYs 19 B Buy on dips. Campbell Chib. 4 1/16 – Buy as Spec. EI Paso Nat! Gas 20 1/4 B Hold for 24 Foote Mineral 12 7/S B Buy at 11-10 Gt. West. Fin. 14 1/2 Buy on dips. Hewlett Packard 18 3/S B Buy on dips. Intern'l Packers 12 B Hold Mesabi Trust 15 7/S Buy on dips. Close 5/5/64 Microwave 9 5/a Mohasco 13 1/2 National Can 18 Pacific. Pete 12 3/4 Raytheon 20 5/S Reeves Bros. 15 3/4 Seaboard W. Air 7 Sperry Rand 16 1/2 Univ. Match 12 l/S Varian Assoc. 11 3/S Vulcan Mat. 14 Qual- Comment B Buy on dips. B Buy on dips. B- Buy on dips. B- Buy on dips. Buy on dips. B Hold for 24 C Buy on dips. B Buy on dips. B Buy on dips. B Hold B Buy on dips. May 5, 1964 This Bulletin IS not, and lIo.ler nu CIlCHmstanc('\. 10 he construc,l a …..UI ufTcI to III u sohutntlOfi to lillY tiny seeull(les referl cd to herem The mformation con- tained herein nul J.unranteetl as \h nccUiacy lr ltnd thr rlU thelcof h nul. lind under no clrcumstnnces IS to be construed ns, a representatIOn by Walston & Cu. Inc All CXPle..,wns of opinIOn HI c- subject chanJ,e 'Ithout lIuilec & Co, Jnl', and Offlet!rs, Directorll, Swckholdcrs and Employees thercof, DUlchnsc-, nnd Illny have nn III th(' H!lllrltH!' mentloncd hcrcm Thh Bulletlll IS Intendt(l lind merely as a S!eneral, mformlll commen tary lind not as 11 complete analYSIS Addlhonal InfurmatlOn With re;Jlect to any scnilitic- referred to herem Will be furnished upon request '11-916

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Tabell’s Market Letter – May 08, 1964

Tabell’s Market Letter – May 08, 1964

Tabell's Market Letter - May 08, 1964
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Walston &- Co. —–Inc —– 1embe,',. Se,,. rod, Stock Euhm,ye NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER May 8, 1964 Five consecutive advancing days wiped out the decline from the April 17th intra-day high of 831.63 on the Dow-Jones Industrials and moved the average to a new high of 836.06 On Thursday. The advance ran out of steam on Friday with prices trending off from their early morning peaks and the average closed off on the day. Despite the fact that a new high was posted, the advance was not impressive. It moved just to about the point one might have expected it to reach, i. e. to around the lower limit of the uptrend channel that had contained the average from the late December low until two weeks ago. Those familiar witn technical analysis are aware that a return to the lower limit of a channel after a downside penetration is a normal phenomenon. More significant was theaction of thedaili breadth index which reacned'a peak of 154 in early April and was unable to advance beyond 149 on the recent rise. A comparison 0 advance-decline figures for the April 20th-27th decline and the Maylst-7th rise, shows the reason for this behavior. Date Advance Decline Difference Date Advance Decline Difference 4/20 488 582 94 5/1 695 381 314 4/21 482 608 126 5/4 643 431 212 4/22 484 593 109 5/5 600 496 104 4/23 474 610 136 5/6 574 481 93 4/24 288 846 558 5/7 593 472 121 4/27 346 744 398 The failure of the general market to generate weakness shown is obvious. There appears, then, little reason to April 24th when we suggested (a) the market had ent r W qual to the previous dvo d in our letter of a new se, (b) that this new phase might involve the building of tops in n many stocks, and (c) that the pollcy is probably s11ll r rv rfuture buying q — – – – — — – – — — There are, however, a possibility of a correction in the stock market. The pessimist iews sib1itly as cause for alarm and worry. The optimist (and it is at least arg '\ s ssful long term investor must, at heart, be an opti- mist) views the d – 3 nity to buy attractive stocks at bargain levels. This letter adopted such a ie ril 24th when we said The next decline will be the last op- portunity to buy stocks i e 1956-62 range before they advance to much higher levels in the 1960's. T, e are plenty of individual stocks that are ahead of the general mar- ket pa ttern and are already in major uptrends. These stocks should be bought and held. 11 With this in mind we have issued a new recommended list which can be obtained from your Walston Account Executive. Varbus stocks have been removed from all three categories on the list as they have reached upside objectives or relative strength has dete- riorated. Holders of those stocks might well consider switching them into other issues on the list. We have also added five issues Scoville Mfg. (35 3/4), Riegel Paper (39 3/4), Vornado (25 1/4) in the Price Appreciation List, and Mohasco (13 3/8) and Vulcan Materials (14 1/ 8) to the Low- Priced Speculative List. These will be reviewed in subsequent issues of the letter. Among individual stocks that are !till in major uptrends are most of the internation oils. This group is represented in our Quality-Long Term Growth list by three stocks Gulf, Royal Dutch and Standard Oil of New Jersey. The latter has been a market leader since the 1962 lows, and recently reached a newall-time high of 90 7/8. Despite its strength there is no sign that the uptrend has abated, and its objective is above current levels. Investors con- sidering new purchases, however, may find Royal Dutch currently attractive. On a per share basis this company has a cash generation almost equal to that of Jersey and reports earnings which are more than 750/0 of Jersey's 4.74. Despite this fact, it sells for little more than half the price. This discrepancy can be traced to the fact that Royal Dutch is a foreign company, but it is nonetheless true that its representation in North America is greater than that of its American colleague. It appears attractive for new purchases on any minor decline. Dow-Jones Ind. 828.57 Dow-Jones Rajl s 199 3.5 ANTHONY WTABELL' WALSTON & CO. INC. ThiS mllrkct letter not. and undel no circumstances IS to he con-tL lied liS. nil trel tn ..ell 01 II bohcltntlUn t'l lollY 1111) CClllltlC.. 1erCl1 to hel ('III The InrOl millIOn 'ontnmcd ib nul to aCCUracy Ul nnrllhe flu nlbhllll-! theleuf 1' nut. and IS to lH,' ( .. a tlun by Wnlston & Co, Inc All of Pinion lite bubJC'Ct to chafil.!c Wllhllt nHIl(e Wnh.ton & Cu, Inc, IIntl lhlcctUI\., and Employees thereor, and may hu\e nn mterest In the M!C'llrttlell mentllne,! helelll 'fhl mnll..et lettel I IIIlen.\ed III11illlecnted mereJ) Il'! 11 l-!encr,ll, mfurmu/ commentary nn rillY tu dny market news lind nut rtll rt cnml,lctc anlilysh Ad(/Itluntd IflUlflt.ltwn \\Ith lejlcl't tu lIny beclIIlltes lefel led (0 heleln WI!! he rUI nt8hed upun request \\), 01

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Tabell’s Market Letter – May 15, 1964

Tabell’s Market Letter – May 15, 1964

Tabell's Market Letter - May 15, 1964
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———- — W—-a–l-s–tloncn–&—C–o–. Mem/)el'. ,veil' Yo),k Siock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST NO OVERSEAS TABEll'S MARKET lETTER' May 15, 1964 1 t.B It is our sad duty to announce the untimely death Thursday night of Vernon C. Walston, founder and President of Walston & Co. Mr. Walston, who was 58, started our firm more than 33 years ago in San Francisco, and built it into one of the nation's largest investment banking and brokerage concerns with capital in excess of 23 million, over 90 branch offices and nearly 2,200 employees. Mr. Walston, during the past few years, personally handled the acquisitions of Cruttenden, Podesta & Milrer and J. R.. Williston & Beane. In the last 12 months he, together with the Corporation's Executive Committee, revised and strengthened the management team to meet the growth of the firm's business. Mr. Walston's passing will not affect the capital-of the Corporation, and Walston & Co. will continue to serve the public as previously. A senior officer of Walston & Co. states that the Walston family interests will remain actively involved in the business. Mr. Walston's two sons are officers of Walston & Co. Throughout the Walston organization, which extends from Switzerland to Honolulu, are a total of 108 company officers. The officers and employees of Walston & Co. extend their deepest sympathies to members of the Walston family. Last week's market was a desultory affair. The closing prices of the Dow-Jones Industrials held in an extremely narrow range of 827. 38 45 low. Advances and declines for the week appear, at this writing, to be a ut -6ilost other technical indicators moved in a more or less sidewise Technical market action has shown a slowly pattern since early April. Breadth action, which was widely noted in ave lost some of its popularity However, our breadth index has i t e r e signal since the start of the ad- vance from the December 23rd lows va1\,- Thebrea-dth -index reached-new high territory along with the the mid-April intra-day high of 831.63. However, the breadth i ex h 0 c n'hrm the May high of 836.06. The divergence has occurred in both w y breadth indices. Indications point to at least a minor downtrend t he distributional top patterns formed are, however, relatively small wit . downside indication in the 800-790 area. These tops could, of course, broa We continue to advise a 25/0 buying reserve. Many groups 11 probably show above average action in any market correction. The action of several of the rails has been most impressive over the past week. Seven railroad issues are on our recommended list. Santa-Fe, Illinois Central and Kansas City Southern reached new high territory during the past week. They should be held and bought on minor price declines. Other issues on our recommended list are Denver & Rio Grande, Norfolk & Western, Pennsylvania and Southern Railway. J. Ray McDermott (24 7/8) has been a disappointing issue in our recommended list. It appears, from a technical viewpoint, to have built up a sizable potential base pattern, but, until this week, it has shown little upside price action. Activity in this issue has increased sharply in the past tw.P days. At Friday's close of 24 7/8, the stock is near the 1964 high of 25 1/2. An upside penetration would be constructive. We continue to like this issue for long term holding. Two groups present very interesting potential patterns at this stage of the market pattern. They are Savings & Loans and Vending Machines. Both of these groups are selling close to their two-year lows. They should be watched very closely during the next market decline. Ability to hold within the broad trading areas already formed would be extremely constructive technical action. While these issues are speculative, the price appreciation potential appears to offset the price risk involved. Dow-Jones Ind. 826.23 Dow-Jones Rails 201.58 .Jtl I EDMUND W. TABELL WALSTON & CO. INC. This market letter IS not. and und('r no Circumstances 19 to be constillcti as, lin o8'CI to bell 01 a ijUhcltntloll to LilY any seem 1e(el'l cd 'to hC1Cln The inrlll mntion contained herem 19 not gunrantced as to 3Ccurncy 01 compietenc-.s and the fUI thereor II! not and undm IlO cncum'ltllnce! \; to be ('on,l1 lied ns n repre.. hon by Walstm & Co. Inc All expressIOns of opinion are bubeet to ('hnng-e \\lth..ut nltl('e 'WfIton & Co Inc. Elllli OfflC'ell!, Director!, fIn.1 gm))oyees thereof, eell nnd may have nn Intel cst In the secu'tle'l mentltlned heletn 'Chi! mnrJ…ellettel II! mtended tlnd IlrCIcntc.1 mer('ly nil a g-eneml mformal commentnry on day to day market newl! nnd not as n complete nnllbhl'l Addltwnnl lIlfUi mallon …. Ith to lillY ,,1'('1I,ltLI'II 'del 11'.1 to herein Will be furllll!hecJ upon request. \\.. 301

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Tabell’s Market Letter – May 22, 1964

Tabell’s Market Letter – May 22, 1964

Tabell's Market Letter - May 22, 1964
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Walston &- Co.. – Inc – – – – – Membe,'s New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lEnER May 22, 1964 The feature of the last week's market was the continued favorable action of the rails. Unlike the Industrial Average which broke below its uptrend channel a month ago, the Dow-Jones Rrtil Average is still in an uptrend channel. This channel started from the Kennedy assassination low of 166.41. At Thursday's intra-day high of 208.95, the average was near the upper line of the channel. At the moment, the lower line of the uptrend channel is at approximately the 198 level. Except for a handful of issues, t he industrial section of the market continues its desultory action. The Dow-Jones Industrial Average still continues in the relatively since mid-average is slowly forming a-distrib-utionaI fop tha.Ube .. moi-e' time maybe requii–ectto' . …..,. broaden the pattern. Individual issues continue their selective action. Two weeks ago, we dropped a number of issues from our recommended list, but added five new stocks. Three of these issues are highlighted below. Riegel Paper (42) is a diversified paper, packaging and pulp company with a broad product line. Increasing volume and improved prices should result in earning s growth over the intermediate and long term. 196'3 earnings of 2.32 were down from 2. 68 in 1962 because of competitive pricing and lowered profit margins, However, it now appears that the earnings trend has turned upward. First quarter earnings of 78 were up over 500/0 from comparable 1963 results. The stock reached its high in 1959'at 45 3/8 and de- clined to 23 3/8 in 1960. Riegel Paper is one of the issues that held above the 1960 low in the 1962 market debacle. The 196210 wa Since then, the stock held in the 25-37 area until the recent uPsideaer t'o. 0 overhead supply, from a technical viewpoint, may be encourt ered in -4 r ,but the long term patter suggests considerably higher levels. r e a strong support level in the 37-35 range. Relative strength action i -. – – Mfg;-'3 metal working field, in n Aluminum operations are bei . g\\)kadi(!j'g' independent brass mill operator. interests are growing in importance, The company is old a ,a common dividends have been paid since 1855. The present divi d I n with a yield of 4.2. Earnings for 1964 are expecte to exceed the 1963 a share. First quarter earnings at 83 a share were 43/0 above the 58 ea ed e first quarter of 1963. The stock is still selling below its 1956 high of 40 1/4. the period between 1958 and 1963, Scovill held in a trading area bounded by 30 and 16. This broad base pattern, from a technical viewpoint suggests a long term 65-85 upside potential. In case of a general market decline, the stock would be expected to meet support at the 32-30 level. Relative strength is good. Vornado, Inc. (24) is the result of a merger in 1959 between a discount store operation, Two Guys from Harrison and O. A. Sutton, a manufacturer of appliances selling under the trade name of Vornado. O. A. Sutton was liquidated and Vornado appliances are now manufactured by outside sources ahd distributed by the company. Vornado is the third largest discount house and operates 21 discount stores on the Eastern Seaboard of which 15 are in New Jersey. Earnings comparisons with recent years are difficult because of the tax-loss carry forward of 9 million resulting from the merger with O. 1\. Sutton and the recent changing of the fiscal year to January 31. The'ia;-l-;ss carry forward ended in August 1963. If earnings for the twelve-month period ended January 31, were fully taxable, the per share earnings would have been arounq 2. '00. Earnings of the fiscal year ending January 31, 1965 are conservatively estimated at around 2.10 a share and t he stock is selling at about lJ 1/2 times these esti'mated earn- ings. This is a relatively modest multiple for the industry. No cash dividends are being paid. A 50/0 stock dividend was paid in 1960. Technically, the stock presents an interesting potential. A high of 45 was reached'ill 1961 followed by a drop to 16 in 1962 general 'market decline. Since that time, the stock has held in the 16-29 area for two years, and has built up a substantial pot ential base. From a technical viewpoint, ability to reach 30 would indicate considerably higher levels. Relative strength action is below average but EDMUND W. TABELL WALSTON & CO., INC. 0 I eft nces IS to be construed as, an offer to sell or a soliCitation to buy any secuTltJes referred to herem The 1nformation C'untmncd herem IS not Jnmrnntced as to accuracy or completeness and the furnlshmJ thereof IS not, and undel no circumstance-; IS to be construed 8S, a rcpresent8- lum h Walston & Co, Inc All expressions of opmion nrc subJect to chnnl!e Without notice Walston & Co, Inc, and Officers, Directors. Stockholders and thcreof, pUlchlllC, sell and mllY have an Interest m the securities mentioned herem ThiS market letter is mtended and presented merely as 11 general, mformal commntary on dny to day market news and not as a complete analysis AdditIOnal information With re;pect to any securities referred to herein be fUI nlshed upon 301

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Tabell’s Market Letter – May 28, 1964

Tabell’s Market Letter – May 28, 1964

Tabell's Market Letter - May 28, 1964
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— Walston &Co. Inc. F/L-E Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFfiCES COAST TO COAST AND OVERSEAS TABELL'S MARKET LEnER May 28. 1964 Last week's market action revealed little of technical importance. The Dow-Jones Industrial Average still remains in the extremely narrow trading area in which it has held since mid-Mar ch. The swing from intra-day high to intra-day low in the industrial average for the past eleven weeks has been only 3.3. Obviously, this trading shelf will be broken in the not too far distant future. In reviewing our various technical indi- cators, we believe the probabilities favor a downside breakout. A decline below the last intra-day low of 807.18 would indicate a further decline to the level. The divergence between the averages and market breadth still continues. Both the daily and weekly breadth indices have failed to confirm the early May new high in the averages. – —'- It is still our contention that the general market is in a broad re-accumulation perio that will eventually rewlt in much higher prices but that. from a technical viewpoint, one more decline is probably needed. rn the meantime, many issues have indicated that they have largely completed their accumulation phase and are in a position to move ahead in the near future. Two such issues were re'cently added to the low-priced speculative section of our recommended list. They are briefly reviewed bElow. Mohasco Industries (13) is probably the world's largest manufacturer of soft floor coverings, The demand for home furnishings – carpets and furniture – should show a steadily mcreasing uptrend over the coming years. Children born in the population boom that sta!'ted in the mid-'40's are now approaching the family'formation stage. This trend will continue over the immediate future. Mohasco was as the result of a merger of Mohawk Carpet Mills and Alexander Smith. In n the company merged with Firth Carpet Company, another i te rYe Early this year, Mohasco acquired Futorian Manufacturing '10 cash. Futorian is a manufacturer of upholstered furniture in the f' Sales of this company in 1963 were about 25 million. With this ohas sales could reach 145 millic,m in Earningsfor,,1963 dropped volved in the integration of rRW ilth' his out of the way, earnings in-should show a sizeable increase and are the 1.20 a share level for 1964. At present price M yields 3.8 vn the e t n about 11 1/2 times estimated earnings and share quarterly rate. An extra of 5 per share was paid in Decem 6, a is could be increased this year. Technically, the stock reached its hig in 1 at 18 and a low of 8 in 1959. A sizeable potential base patt- ern has been formed w' substantially higher levels suggested. Good support should be met at around the 12 rea in case of a general market decline. Vulcan Materials (14) is a major construction materials producer. Stone, sand. gravel, slag, concrete building blocks and other concrete products accounted for almost 70 of sales in 1963. Industrial chemicals and the metallic division accounted for most of the balance. With 1964 indicated as another good construction year and increasing family formations becoming a major factor in the industry in the later '60 's and for a long time to come, the long-term outlook is favorable. Earnings have increased mOdestly each year since 1959 and this trend is expected to continue. The seasonal pattern of sales and earnings results in lowered sales and usually a loss in the first quarter. For the first quarter of 1964, sales increased to 23 million as compared to 18 million in the 1963 quarter and earnings of 1 were registered as against a 15 loss in the comparable 1963 period. At present price levels, the stock is selling at less than 11 times 1963 earnings of 1. 31. The first quarter results suggest higher earnings in 1964. The dividend has beenraised to 15 quarterly and at the annual rate of 60 the stock yields 4.2. Last year, the company purchased 75,000 common shares at an average price of 11.69 and accepted te'1ders of 330,867 shares at 12.50 a share thus reducing its outstanding stock. The technical pattern is constructive. After reaching a high of 20 in 1959, the stock declined to 8 in 1960. Since that time. the stock held in the 8-14 range until the recent advance to 15. The pattern indicates a favorable long-term potential above the former highs. Dow-Jones Ind. 820.56 Dow-Jones Rails 205.95 EDMUND W. TABELL WALSTON & CO., INC. morket letter not. and under no cIrcumstances is to be construed os. an offer to sell or a SOliCitation to buy any secuntles referred to herein The information (ontnined herem twn by Walston Is not Ituaranlced as to aCCUraCY & Co, Inc All c(pr(!SBlOns of or completeness and the oplmon subject to furnlshtnlt thereof IS not. and under change without notlce Walston & no Co c . Ircumstanc Inc. and es 18 to Officers be construed . Directors. as. 11 repre'lentaStockholders and t'mployees thereof pUlchase sell and may have an Interest In the securltles mentIOned herem ThIS market letter 16 Intended and presented merely .116 a general, c o m m .. on day to day market news and not as a complete analYSIS AdditlOnal mformatlOn With respect to any securities referred to herem will be urfllshed upon request \\ N 301

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