Tabell’s Market Letter – October 02, 1964

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 LETTER October 2, 1964 ELECTRlBfl'STORAGE BATTERY COMPANY Current Price 42 The Electric Storage Battery Company is, Current Dividend 1. 60 as its name implies, a producer of a diversified Current Yield 3.8 line of batteries ranging from flashlight dry cells Long Term Debt Common Stock 9,375,000 2,501,547 shs. to automotive batteries to heavy industrial batteries, and expensive specialized units for use in the missile and space program. It is, however, fond Sales – 1964-E 182, and other Sales – 1963 168,500.000 – – literature as a packaged power producer. To Earn. Per Sh. 1964-E Earn. Per Sh.1963 3.50 2.91 many, this term will seem a euphemism, but it is, perhaps, more descriptive of what the company does and, more importantly, of future areas Mkt. Range – 1964-63 441/8-333/8 of growth than the familiar battery. We tend to think of batteries as things that power flashlights and automobiles, and these, indeed, are prevalent current uses. Yet, in another sense, a battery is, indeed, portable power, the means of producing electricity from a continuous re- action taking place in a relatively confined space. A moment's thought will reveal many possible future uses for such packaged power once the technological problems involved can be solved. Missiles and satellites, of course, are one such Storage Battery develops and manufactures a silver-zinc battery for many ace e icPes. The fuel ceil, which is able to produce a continuous electric of promise and the company's research in this field is f , is a familiar area – ens e. ne of the most interestin areas of development involves lightweight sources for portable hand tools, thus freeing rec eab ells to be used as power e er r he tyranny of the electric outlet – a – nt-e-r–ed-a-rQund h-ighly-expensive nickel-cadmium batteries. which could bring the cost of b e on an inexpensive conventional cell, down sharply. All of this ;miSs C t d the fact that a major portion of ESB's earnings come from the mo monplace battery applications. The intensive research on new and exciting ts, ever, does add attraction to a company which has demon- strated eminently satis ct progress over recent years and which is statistically cheap on both an earnings an ance sheet basis. Automotive batteries now account for some one-third of estimated sales with 30 each coming from the Ray-O-Vac division, and from industrial (including missile) batteries. Foreign business, growing at a faster rate than domestic, contributes an important part of the total. Of automotive battery sales, some 75 serve the replacement market, an interest ing statistic in light of the substantial number of automobiles sold over the past three years. Ray-O-Vac's sales tend to move in line with consumer disposable income. Earnings have, as noted, shown satisfactory progress, advancing from 1. 59 in 1958 to 2.91 last year, with an increase shown in all but one of the intervening years. First-half results were 24 ahead of 1963, and for the full year earnings could reach close to 3.50, thus placing a modest 12-13 multiple on estimated 1964 earnings. The 1. 60 dividend provides a 3.8 yield. Book value as of the end of 1963 was 36.00 per share, including net current assets of better than 25 per share. In the light of this record, the stock appears attractive on a long term basis, and it is being added to our recommended list. From a technical point of view the stock has strong support just under 40, and an initial objective of 60 followed by possible higher levels. It is quite possible that new products now in the development stage could provide an increasing impetus to earnings growth which would justify such prices. Dow-Jones Ind. 872. 65 Dow-Jones Rails 218.10 ANTHONY W. TABELL WALSTON & CO. INC. Thlh mArket lett.cr IS not. and under no CU'cumstnnces IS to be con'ltrued as, an offer to sell or n soilcltnhon to huy any securities referred to herein The mformatlOn ('Hlltluncd herem is nnt I!uarllnteed flS to nC('\lracy or compi('tcness and the furnlshJnR thereof IS not, !lnd undel 1111 circumstances IS to be construed as, a representa- hon b) \\'alston & Co. Inc All expressions of oPinJon are subject to chnnl!(! Without notice Walston & Co. Inc, and Offlcerll, Directors, Stockholders and hmployecs therCQr, purchast, sell lind may have nn mterest In the seCUrities ThiS market letter IS mtended and presented merely as a general, Informal ('ommntnry on day to dny market news and not as a complete AddltlOnnl morma11On With to any secuntJes rderrcd to herein Will be fm nJ;hed upon request. ,\ N JOl …