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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 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.