Viewing Month: August 1964

Tabell’s Market Letter – August 07, 1964

Tabell’s Market Letter – August 07, 1964

Tabell's Market Letter - August 07, 1964
View Text Version (OCR)

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 August 7, 1964 The wide price swings of the past week were motivated mainly by emotional reactions to the news development rather than by any fundamental change in the economic background. Probably we can expect a continuation of such nervous price action until Election Day with the market moving up and down in response to the swings in foreign and political news. We would expect the price range, however. to be relatively narrow just as it has been for the past six months. The Dow-Jones Industrial average first reached the 800 level about six months ago in the average has roughly held in a sixty-point trading area witlya high of 855. 19, and a low of 796.90, or a range of 80/0. At the moment, the Industrial average is right in.the middleoLthis six-month trading area. The low for the past week was 820.78 and, at that level, most of our shorter term technical indicators had reached or approached oversold territory on a short term basis. Absence of any disturbing news over the weekend might result in a rally toward the upper part of the trading area. How ever, we would not expect such a rally to carry into new high territory at this stage of the market pattern. From a technical point of view, the Industrial average reached its upside objective at 850 and time will be needed to form a new pattern that would indicate higher price levels. On the downside, there is strong support at the 820-800 level. If unfavorable news developments resulted in a decline below the June low of 796.90, the next support level would be around the 775-765 level. The ma rket high prior to the Kennedy assassination low was 767.24. Probably the Industrial average will continue to hold in the six-month trading range of roughly 850 to 800 for the foreseeable future. In the meantime, there are individual situations, such as the following, that appear interesting. 0 Seaboard World Airlines, in the low-priced se..s,;tion f u ended list, rose 1 3/8 points on heavy volume, closing at 7 3/8. th' rength was a Civil Aeronautics Board decision giving all-cargo carrierE\\ as board, the exclusive right to sell large volume cargo space on Q I' carriers, air freight forward- ers and bulk shippers. This u important change in the air freight traffic'picture and could'be of-gr-eat e t in addition to the CAB ruling e speculative attraction at this time. In 1955, Seaboard arne s aPe and sold at a high of 67 1/2. It achieved these earnings with propert os ue of some 2 1/2 million, and the company had no debt. In the ensuin ; perty has increased to over 40 million, but debt, at the end of December 6, w vel' 33 million. Deficits were incurred in every year be- tween 1957 and 1961, an e book value per common share has decreased from over 28 to a minus figure. The ck sold as low as 2 1/2 in 1961. Clearly, Seaboard's equipment purchases during the past decade have been somewhat less than profitable. There is, however, some evidence that the heavy investment of bor- rowed funds during the past ten years is beginning to bear some fruit. Seaboard, as a carg airline, engaged primarily in carrying freight across the north Atlantic, is a beneficiary of a stable rate structure, longer average flights, and high rates which are providing the com- pany with excellent yields per revenue ton mile. New routes will permit the company to serve Europe on an area basis at substantial savings in cost and improvements in utilization The CAB decision, if it stands, will also stimulate growth in volUIlE,The effect of all this on earnings could be dramatic. The leverage provided by Seaboard's huge debt is, after all, a two-edged sword. Just as leverage led to a dramatic collapse of earning power 111 the late 50's, it can lead to an equally dramatic improvement as equipment utilization improves. Indeed, some improve- ment has already been noted. Earnings have expanded from a deficit of 1. 08 in 1961 to 29 in 1962, 47 in 1963, and a projected 80 in 1964. Future expansion could be at an even greater rate. Obviously speculative, the shares, nonetheless, appear attractive for those individuals who are willing to assume substantial risk in return for the prospect of substantial gain. From a technical point of view, the stock has held in a narrow trading range since 1961. An ultima te upside would indicate considerably higher prices. Dow-Jones Ind. 829.16 Dow-Jones Rails 213.02 EDMUND W. TABELL WALSTON & CO. INC. ThiS market letter 19 not, and under no circumstances 18 to be construed as, an offer to sell or a solicitatIOn to buy any eeeUrltles referred to herem The Information ('untamed herem is not gUllranteed as to accuracy or completeness and the furRlshlng thereof 18 not. and under no circumstances 15 to be construed as, a repre!lenta- tlOn by Walston & Co, Inc All expreSSIOns of opmlon are subJect to change without notice Walston & Co, Inc, and Officers, Dlrcctors, Stockholders and Employees thereot, purchase, sell and may have an interest In the secUrities mentioned herein, ThlS market letter 18 Intended. and presented merely as a general, mformal comm.mtsry on day to dRY market news and not as a complete analYSIS AdditIOnal mformatlon With respect to any securllJes referred to herem will be furnished upon request WN .301

Download PDF

Tabell’s Market Letter – August 14, 1964

Tabell’s Market Letter – August 14, 1964

Tabell's Market Letter - August 14, 1964
View Text Version (OCR)

Walston &- Co. —–Inc Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFfices COAST TO COAST AND OVERSEAS TABELL'S MARKET LEnER August 14, 1964 -FilE CROWELL-COLLIER PUBLISHING CO. Current Price 24 The regular reader of investment liter- Current Dividend 4/0 Stock ature is, no doubt, already familiar with the Current Yield growth potential inherent in companies ser- Long Term Debt Common Stock 25, 205, 700 3,396,276 shs. ving American education. Myriads of statistics have been cited describing the projected futu growth of school and college age population Sales – 1964-E Sales – – 110150,,010600,,-000000- and the effect that this growth is expected to or-textBooks antFanciHary . Earn. Per Sh. 1964-E Earn. Per Sh. 1963 1. 50 1.31 Mkt Range 1964-1961 45 1/4 – 133/4 Includes 11,787,600 4 1/2 Conv. Deb. due 1981, convertible into common materials used in education. On this basis, the common stock of Crowell-Collier appears to have a good deal of speculative appeal. The company is perhaps the only operation with an entrenched position in four major areas of the Education Industry. These are textbook at 40.43 a share, and 5,418,000 5 Conv. Deb. due 1983, convertible into common at 15.38 a share. publishing, encyclopedias, home study courses and supplemental rna terials. The growth of Crowell's sales in each of these areas bears eloquent witness to their attraction. Sales of encyclopedias and other books sold Subscription Book Division have grown almost steadily from 121/2 million 19 apeak of 42 million in 1962. School and college textbook sales have increaffj 5 i-in 1960 to 25 million in 1963. LaSalle Extension University, the y 0 study division, has al- most tripled sales since its acquisition in 1961, and unt or 12.6 million of revenues last year. Crowell, in addition, is the ra – tations, Brentano's Book Store, – .. 0 ,,' tho .om,,y ae'm. earnings record over the pas c than impressive and accounts, undoubt- edly, for the relative s is!ia n of the stock compared to that of other textbook publishing compan- s. e t' c Clered, however, that the years since 1956, when the company discontinu m a' operations, have been largely years of acquisition and rebuilding, it become app t that the past record is a less than accurate guide to future potential. When the co y discontinued magazine publishing, the encyclopedia division became its only majo source of revenue. Since then it has acquired the Macmillan Compan in 1960, LaSalle Extension University and the Free Press of Glencoe in 1961, and other small operations including Brentano's in 1962. The integration of these companies into the Crowell-Collier operation has taken time and, until recently, penalized efficiency. Recent results, moreover, have been hurt by the entry into the paperback book field in late 1961. The paperback division produced heavy losses in 1962 and, to a lesser degree, in 1963. Losses from this division have now, it is believed, been eliminated. Moreover, extensive financial realignment has been accomplished. Improved cost and budgeting controls have been established over the past year and bank debt has been substan- tially reduced. As a result of all this it appears that Crowell is now ready to demonstrate the earnings growth to be expected from a company serving so many growing areas.. Indeed, in the past two years earnings have begun to increase more in line with sales growth, which has been -steady and rapid since 1957. From a low of 91 per share in 1962, per share results moved to 1.31 in 1963, and should be slightly better than 1. 50 in 1964. The company has followed a policy since 1959 of paying an annual 4 stock dividend in orde to conserve cash and no change in this policy is anticipated in the near future. Selling at sixteen times estimated 1964 earnings, a considerable discount vis-a-vis comparable companies, the stock appears -attracti;eJol'.oapital gains purposes. From a technical point of view the stock moved-liIp'alDngW-ith.theothe-p''Publishing companies to a high of 45 1/4 in 1961. It reacted to a 1963 low of 13 3/4 and has since then formed a substantial base in the 14-26 range. Eventual upside breakout from this range would give the stock a long range upside potential of 49-54. It is being added to our recommended list for capital appreciation. Dow-Jones Ind. 838.81 Dow-Jones Rails 213 59 ANTHONY W. TABELL WALSTON & CO INC ThlB mnrkd letter IS not. and under no clrcumstancCS Is to be construed as, an olter to sell or !l soliCitatIon to buy any securities r.cferred to herein The InformatIon cuntained hcrem Is not jtuarlmteed as to accuracy or complctencss and the not, and under no circumstances IS to be construed all, a tlOn by Walston & Co, Inc All ellpressions of opinion are 8ubJect to c;hange Without notice Walston & Co, Inc, at'ld Officers, Directors, Stockholders and Fmployees thereof purchtlllC on day sell and may to day marke have t new an sa In nd terest not a I s n a the SecUrities mentIOned herem This market letter is mtended complete analysll, Additionailnformation With respect to any and presented merely 88 a general, securities referred to herein furnished upon request.

Download PDF

Tabell’s Market Letter – August 21, 1964

Tabell’s Market Letter – August 21, 1964

Tabell's Market Letter - August 21, 1964
View Text Version (OCR)

Walston & Co. … Members New YOI'k ,Stock Ex,change NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LEnER August 21, 1964 There would excited about the price action of a stock that has been fluctuating between 851/2 and 793/4 for the past six months. That is what the Dow- Jones Industrial Average has been doing percentagewise since late February. Furthermore, the amount of fluctuation within the trading area has been so small that neither a sizable po- tential top pattern nor a sizable potential base pattern has been formed. Probably the mar- ket will continue-to hold within the rough confines of the 850-800 range for the foreseeable future. Volume indications point in this direction. In recent weeks, total volume has declined quite sharply with most of the decline brought about by lowered buying power rather than any sharp increase in selling pressure. On our graphs of total volume of trading on the New Yor Stock Exchange for the past thirty-five trading days', the upside volume has dropped — – 26,756,000 shares while the downside volume has increased only 352,000 shares. This is a rough estimate based on the percentage of advancing and declining stocks on each day of trading. It obviously denotes uncertainty and a lack of buying interest despite a rising earn- ings pattern in most companies and a fundamentally sound economic background. The present market appears to be dominated by emotional factors rather than fundamentals. This is not unusual. In the past, the market has probably moved contrary to the immediate trend of earnings 650/0 of the time. Despite the sidewise movement of the averages, there have been many price moves of importance in individual stocks and groups in both directions. The airlines are a case in point. Readers of this letter will recall that this group was one of our favorites at the 1962 lows. As noted in the table below, the airlines had a a period of less than two years. Western Airlines showed a 529 advance from 1 ow roughly 7 to the high of 44 reached in April of this year. Of the nine t eta, Eastern Airlines had the smallest percentage advance at 1690/0. The avera as compared with a rise of 63 in the Dow-Jones Industrial e time period. 196' Low /, to 1/' Re' C10 8/21/64 . .. – .. –. National Airlines Northwest Airline Pan Ame r. World Trans World Air. United Airlines Western Airlines 7 43 49 42 34 48 40 65 43 44 37 34 41- 33 45 – 36 31 – 25 35 – 28 51 – 43 32 – 26 511/4 541/8 31 3/4 401/4 49 35 Most of these stocks reached their 1964 highs in April of this year. At that level, most issues had reached the upside potentials of the bases formed in the 1960-1962 period and ap- peared in need of a technical cOrrection and a consolidating period before the long term ad- vance was resumed. It was our thought that a one-third to one-half correction of the advance from the 1962 lows to the 1964 highs, 'followed by a consolidation period, was the probable price pattern. This would be normal technical procedure in a group that probably was tempo- rarily overbought, despite a most favorable long term outlook. In the table above, which is adjusted for stock splits and stock dividends, several of the issues are approaching the point of normal correction and shou ld be watc..h.. ed closelyfo,r….,.,l…o.–.n.. g ter-m-buying-.–o pportunit,i..es. T… h'etr downside potentials of the teclinical patterns formed since April are very close to the one- third to one-half retracement figures noted above. It is interesting to note that sharp decline, of 200/0 and more in this group have had no effect on the general market pattern. This cO)ltin- ues to point up our market thought that the action of individual stocks beam little relationship to the price action of the averages. In our recommended list, this letter attempts to pick out individual situations that will show above profits at the appropriate time. We suggest the sale of Pure Oil (60) which was re'commended il. the 40-38 range late in 1963. There have been two offers to buy this issue at 60 and 65. It may move moderately higher, but we suggest a switch into Shell Oil (47 3/4) which we will review in detail in a later letter. Dow-Jones Ind. 838.62 Dow-Jones Rails 211.38 EDMUND W. TABELL WALSTON & CO. INC. This market letter is flot, Dnd under no circumstances is to be construed DS, an to sell or contained herem 111 not guaranteed as to accuracy or completeness and the furnlShlrilt thereof So solicitation to buy IS not, and under no Dny securities ref circumstances ill etorrebde to herein construed The in!ormntlon 8.8, a representa- tIOn by Walston & Co. Inc., All expressions of opimon are BubJeCt, to change Without notice Walston & Co. Inc. and Offlcen. Directors, Stockholders and E I yees thereof purchase sell and may have an Interest In the lIecurities mentioned herein. ThiS market letter Is Intended and presented merely as a general. Jt;on day to day market neW8 and not as a complete analysis. Additional mformation with respect to any securities referred to herein furnished upon request (

Download PDF

Tabell’s Market Letter – August 28, 1964

Tabell’s Market Letter – August 28, 1964

Tabell's Market Letter - August 28, 1964
View Text Version (OCR)

Walston &Co. Inc. Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COA.ST AND OVERSEAS TABELL'S MARKET.LETT.ER, —- August 28, 1964 – —- GENERAL DYNAMICS CORPORATION Current Price Current Dividend Current Yield 33 none One of the more noteworthy market develop- ments of the past summer has been the sharp improvement in relative strength of aerospace issues Long Term Debt 2. 90 cum. conv. pfd. Minority Interest Common Stock 99,000,000 1, 663, 634 shs. 13,299,292 9.998, 259 shs. Earn. Per.Sh. 1964-E – – 3. Earn. Per Sh. 1963 4.97 Earn. Per. 1963 (Adj.) 3.28 Since April, the aerospace index has advances al- most 15/0 versus a 3 rise in the 500. The reasons for this improvement are many, but most important, perhaps is the growing realization that, despite the nuclear test ban treaty, it is unlikely that be any substantial reduction in de- fense spending or aerospace contracts. Stocks of most aerospace companies are sell- Mfrt.Range 1964-63 331/4 – 23 1/2 Adjusted to assume full tax payment. ing at modest multiples of 1963 and projected-1964 results, and many companies are of interest. How- ever, General Dynamics incorporates a number of elements which seem to make it attractive at this time. These elements include the TFX contract, which should lend both stability and growth to earnings in the late 1960's, the turn around from the 1960-61 commercial fet debacle, whose momentum continues even today. the identification with the nuclear submarine program, and broad diversification. General Dynamics is, indeed, diversified. Sales general cate- gories, including aircraft. missiles and space, submarine e and industrial. During 1963 the Electric Boat Division launched m es and current backlo is 17 vessels. The company produces the Atlas rock. e Te r and Tartar missiles, and through its Stromberg-Carlson Division, it isejO 0 r of telephone equipment. Its General Atomics Division is active v nt uclear power stations, and anothe divisionpLiquid.Carbonic. is amajor – 0 om Throughout the latter e potential inherent in the company's operation was widely recognize s ck\v\;;; speculative favorite selling as high as 685/8 in 1957. Then of uced profit margins,culminating in the unparallele loss of 341 milli' t of the Convair 880 and 990 jetliners. Most of this wa written off against 1 1 0 m nd the company showed a deficit of 14. 32 per share in that year. At the end of 196 1 erm debt was up to 250 million, short term borrowings were 90 million, and the c any had a precariously low net working capital of under 50 millio Dividends were eliminated and in the 1962 market break, the stock sold as low as 20. In 1962, Mr. Roger Lewis took over as president of the company and a new manage- ment team was gradually installed. Since then, progress has been encouraging. Pre-tax ea ings rose in both 1962 and 1963 and will show another gain in 1964. although reported figures will show a decline due to expiration of the tax-loss carry forward. Profit margins have widened and in 1963 they were back at the level of the mid-1950's. Short-term debt has been completely eliminated. Long term debt has been reduced by more than 50 million. Working capital has increased to 188 million. and the company, under a modified debt agreement, is now in a positin to resume dividends. In short, the progress of the past three years is nothing less than remarkable. Meanwhile, the company is still selling for less than 'nine times estimated 1964 results. Results of the TFX contract have yet to be reflected to any significant degree in earnings, and this source will probably provide a continuing flow of income throughout the latter part of the 1960's. The nuclear submarine program should continue to be profitable and growth should be shown in numerous of the company's other operations. From a technical point of view the base formed in the 24-33 area indicates a sizable long term upside potential. The stock is being added to our Recommended List for capital appreciation. Dow-Jones Ind. 839.09 Dow-Jones Rails 207.49 ANTHONY W. TABELL WALSTON & CO. INC. This market letter 18 not, and under no eireumstance'll 18 to be construed as, an ofter to sell or a 801ieltatlon to buy D!'y securities referred to herein The Information contained herem is not guaranteed 8S to accurney or completene!l8 and the furnishing thereof 16 not, and under no circumstances is to be construed as, a representa- tion by Walston & Co Inc. All cJpre!lsions of opinion are subject to ehl'lnge wltbout notice. Walston Co., Inc., and Offlcel'll, Directore, Stoekholders and Employees thereof sell and may have an interest in the securities mentioned herein. This market letter ie intended. Ilnd presented merely 8e a general, on day to day market news and not as a complete analySIS. Additional information with respect to Bny eecurlties referred to herein will be furnished upon request. WN 301

Download PDF