Viewing Month: February 1965

Tabell’s Market Letter – February 05, 1965

Tabell’s Market Letter – February 05, 1965

Tabell's Market Letter - February 05, 1965
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Walston &Co. – INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange, Chicago Board of Trade and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OveRSEAS TABELL'S MARKET LETTER February 5, 1965 – 'SPARTANS INDUSTRIES. INC. Current Price Current Dividend Current Yield 21 The stock market has always been eager to reward success, Companies with well-defined records of growth tend to sell at more generous multiples of earnings than those subject to cy- Long Term Debt Common Stock Sales 1964-65 E Sales 1963-64 5,250, 125 1, 826,780 shs. 145,-000,000 134,620,000 clical fluctuations. Conversely, however, the market is equally quick to become disillusioned, and when a highly regarded company suffers -temporary the reaCtion-'is often severe – – – in many cases far out of proportion in magnitude to the difficulties. This appean Earn. per sh. 1964-65 E Earn. per sh. 1963-64 1. 60 1. 37 to have been the case with Industries. From 1954 until 1959, Spartans had carved out for itself a brilliant record in a highly com- Mkt. Range 1965-61 51 – 9 3/4 Partially taxed. petitive field. This was in the era of the greatest growth for the discount store, and, concurrent with this growth, there occurred a sub- stantial increase in sales of popular-priced, private-label clothing marketed through discount houses and variety chains. In this area, Spartans created a magnificent rose from 17 million to 39 million, and net income fro 3 and 1959 its sales tEi 2, 260, 000. In early 1961, with this record on the books, Spartans so ia 1/2. Then, in 1960, a decision was made which r y at least, to be disas- trous. Highly successful as a seller to retailers, self. It did SO in an almost headlong fashion. Tn d into the discount field itlittle 'more than two years it hld. discunt put an almost impossible strain on th 0Wny -r. toul'LmoCITeinto ,an unfamiliar field Management was thinned and the situation was made worse discount industry. To add to the com- pany's sharply on orders fo rtie move into competition with them, cut back Thus, by 1962, although sales had increased to 116 million, the c ''I deficit of 98 per share and the Rtock sold as low as 9 3/4. I The cliche about n eping a good man down, however, applies also to companies. By 1963, pre-tax inco had returned almost to its 1959 high, and net, with the benefit of a tax credit seta new record. For 1964,fiscal year ended January 31,1965) per share earn- ings could hit a new high of close to 1. 60, fully taxed, vs. 1. 37, partially taxed,in the previous year. Moreover, there appears to be considerable room for further improvement. Manufac- turing customers lost when Spartans moved into the discount field have returned,and Spar- tans has been forced to expand its manufacturing operation. Manufacturing sales, estimated at 60 million last year, could move close to 100 million by 1966. Further more, the leverage inherent in improved retail profit margins is large. Currently, the re- tailing operation has just this year gone into the black. If profit rna rgins in this division were brought to the 3 -.5'1'0 pre-tax level prevailing in the indUstry, earnings would increase considerably. Combining the sharply increased manufacturing volume and improved profit margins in the retail segment of the business, it is' not too hard to see earnings at twice current levels by 1966 or 1967. All this seems to make Spartans, recently added to our low-priced list, an attractive speculation. Technically, the stock recently broke out on the upside of a substantial base ormation with a longer term objective of 36. There is support just under current levels. Dow-Jones Ind. 901. 57 Dow-Jones Rails 210.98 ANT HONY W. TAB ELL WALSTON & CO. INC. n IS to be contrlll'd at, an uffer to !'eJl 01 a soliCitatIOn to buy any securatles referred to hereIn The Thu; market Jettel 1 not, and under no Cell !Inri the furnlthllll! thf're.,f IS not, and under no Circumstance;, IS to be construed as, n representn. contnmed her-ein is not guaranter as to accuraci or arc subject to ch UII!C wlthont 110tlce. Wnlston & Co, Inc, and. Officers. DIrectors, Stockholders Ilnd liOn by Walatn & Employl'es thereOf, Co, Inc Ilurchase, AI sell and mlY thav0e opm an crcst In as n thc complete mentIOned hercHl ThiS market leller mtended and presented merely as a general. nnnIY'I, AdtiltHmnl InformntlOn wlth I espect to any securIties rerci red to herem ,,11 be Informal COn'UTlentnry on day to dny rn1I.rc news all \\ N JOt iurnll;;h('( upon request

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Tabell’s Market Letter – February 12, 1965

Tabell’s Market Letter – February 12, 1965

Tabell's Market Letter - February 12, 1965
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Walston &Co. IL e INVESTMENT BANKERS MUTUAL fUNDS MUNICIPAL BONDS Members New York Stock Exchange, Chicago Board of Trade and OtherP.rincipal Stock and Commodity Exchanges tc OFFICES to COAST AND OVERSEAS TABELL'S MARKET LETTER February 12,1965 Last week's action, while dramatic, was not particularly significant. At February 4th high of 911. 80, the Dow-Jones Industrial Average had reached the 910 objective repeatedly mentioned by this letter over past weeks. The dip to Thursday's low of 879.97 constituted a normal one-half correction of the move to that objective from the December low of 850. 19. A new pattern must now form – probably in the 875-900 range. Similar action occurred many times in 1963 – 64 and, previously, it has always been followed by formation of a base and a move to new highs. This process cannot repeat itself indefinitely. At some point strength will fail to follow through, and the result will be the formation of an intermediate-term top. Thus, the action of the next few weeks will be critical in assessing the intermediate-term pattern. '1 – – ' – — – – – – -0……00- – ME TROMEDIA/INC. Current Price Current Dividend Current Yield 39 7/8 .70 1.80/0 The task of the security analyst is often difficult. It falls to his lot to analyse a variet of companies in different industries with dif- Long Term Debt 3 12 1/2 Conv. pfd. Common Stock Revenues – 1964 Revenues – 1963 37,000,000 32,000 shs. 1,855, 327 shs. 91,926,000 60,000,000 ferent markets and with different operating problems. Nowhere does this difficulty become more acute than in the analyses of com panies selling services rather than goods. In a service company, an entirely unique set of rules applies. Earn. per sh. 1964 2.55 (preliminary) This reason for the mar- Earn. per sh. 1963 2.13 ket's failur 0 Metromedia, Inc., Mkt. Range 1965-64 43 1/2 – 27 1/2 a 0 of stations,radio sta- Capitalization as of Dec. 1963 includes tios, la st figure in outd.oor adver- 4,512,000 Debs. convertible into com- pany has grown rapldly over mon at 16.67 a sh. and preferred convertible – as years, largely through a series isitions;financed'mainly by debt.- It ' Excl. Spec. credit 1. 66 – increased its revenues in every year \\. since its formation in 1955, and with the ex- ception of one inception. Despite 1 S S net income and cash flow in every year since its current price it is selling for some sixteen times 1964 earnings and just ove e n t s 1964 cash flow. The cash flow concept' n important one. In a manufacturing company cash flow has little significance, sin arge portion of the cash generated must go to replace fixed plant expense. In a service wdustry, however, the assets are largely intangible. The ability to gen- erate cash throw-off becomes the trade-mark of a successful management, and in this area Metromedia's management has shown an excellent record. Under FCC rules, the company is limited to the number of stations it can own and operate. In this environment, however, it has shown an excellent ability to trade-up, i. e., purchase properties, improve their operating results and resale, using the proceeds to move into lar- ger metropolitan areas. An example of this would be the recent profitable sale of a Sacra- mento TV station for 8 million, paving the way for possible repurchase of another station in a larger area. Also, by generating cash flow the entire cost of its entry into outdoor adver- tising in 1960 through the purchase of Foster & Kleiser on the West Coast has been recovered There are, to be sure, risks involved in Metromedia. Future performance depends on man- agement's ability to Us successfuLFecQ,d. There f-ppegrs, however, to be little rea- son to doubt this ability. Another risk lies in the large amount of debt, but this is partially mitigated by the heavy cash throw-off shown by the properties the debt was used to acquire. Another weakness is potential dilution through convertible securities and warrants. This, how ever, is expected to be slow and interest saving will reduce the pressure on earnings. In other words, viewed within the context of its industry, Metromedia appears to be an outstanding speculation On the ability of a proven management to continue to better operating results. From a technical point of view the stock has an upside objective of 64 with support just under current levels. It is again recommended for inclusion in capital gains accounts. Dow-Jones Ind. 888.47 Dow-Jones Rails 208.18 ANTHONY W. TABELL WALSTON & CO. INC. ThIS market i(!ttcr IS not. and under 1'10 Circumstances II, to be construed (1S, aD offer to sell or Il solicitatiOn to l.uy any securIties referred to herein. The tnformahon contamed hereA is not guaranteedns to necurncy or completeness and the furmshlIl).! thereof 1I! not, and under no CIrcumstances IS to be construed as, a representa. tlon by Waleton & Co, Inc All expreSSIons of OPiniOn are subject to chnn)!e WIthout notice Walston & Co, Inc. and OffICers, DIrectors, Stockholders and EmployOes then!O(, purchase, sell nnd may ha\'e nn mterest In the seCUrities mentioned .hereln ThiS market letter IS mtended and presented merely as a general, informal commentary on day to day mnrket neW!! and not as a complete annlysill mformatlon respect to any securities referred to herem WI!! be furnIshed upon reQuest. \\ N J01

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Tabell’s Market Letter – February 19, 1965

Tabell’s Market Letter – February 19, 1965

Tabell's Market Letter - February 19, 1965
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I Walston &Co. (iLf INveSTMENT BANKERS MUTUIAnLcFUNDS MUNICIPAL SONDS Members New York Stock Exchange, Chicago Board of Trade and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS lABEll'S MARKET lETTER February 19, 1965 At Tuesday's intra'da'yluw-of'87'''l–48, the Dow-Jones Industrial Average had re- traced Just about two-thirds of the advance from the December low of 850.19 to the Februa high of 911. 80. It is interesting to note that this decline can probably be taken to be the end of the year-end rally and thus, in 1965, the rally has failed to carry much beyond the first month of the year and, in addition, failed to advance 100/0 from the December low. This raises some question as to the trend of the market for the year. A rally at the end of the week moved the averages back to an intra-day high of 890.24 The short-term outlook will, of course, depend on what type of pattern forms at these levels. In current uncertain markets the investor will probably do best to concentrate on companies where sound earnings growth affor-ds some measureaf-market protection. Such a company is reviewed below. LITTON INDUSTRIES, INC. Current Price Current Dividend Current Yield 86 2 1/20/0 stock The technique of diversification by acquisition is hardly an unfamiliar one in American corporate annals. However, as many in- Long Term Debt 147,474,000 vestors in acquisition-minded companies 3 Conv. Pfd. Common Stock 539,925 shs. 10,817,235 shs. have learned to their sorrow, the merger route is often fraught with pitfalls. By con- Sales – 1964-65 E Sales – 1963-64 950,000,000 686, 140, 000 trast, it dustries h to say that Litton Inb reader among all Am s i s ing the manage- Earn. per sh. 1964-65 E 3. 35 n s to successful growth Earn. per sh. 2. 70 Mkt. Range – 1965-63 86 1/2-54 -f'\\by aci'Lu'1Aitio ,on;' pIe will' suffice. In the past itton has acquired a multiplicity of Note Debt iricludeS'73 enteriYiises;'yet iri195'7-Littori'f; sales Preferred convertible into the sales of all companies it has since for share. acquired, were under 80 million. For the ;;. year ended July 1964, Litton sales were 686 million. Obviously,' llag' acquired companies – it has caused them to grow and prosper under its ae Particular mana lent sktlls probably account for a gOOdly portion of this record. Another factor may b he fact that Litton-acquired companies generally dovetail one way or another with existing Litton operations. For example, let us consider two major acquisitions shortly to be consummated. The acquisition of Royal McBee will albw the integration of that company's typewriters 3nd office form business mto the sales organization of Litton's successful business machine operation. The takeover of Hewitt- Robins places Litton in the materials handling field and ma terials handling and processing systems utilize the com- puting and controls technology which Litton already possesses. Litton, as put together over the years, now consists of five major groups. The sys- tems group is a leader in a broad line of aircraft guidance systems. The business machine group manufactures and sells Monroe calculators, adding machines and accounting machines Sweda Sales registers, plus pap.ersteel office equipment andspecial purpose.computers. The components group produces electronic equipment, some of goes into Litton's own systems, and the marine products group currently has a 300 million backlog, including four nuclear submarines. The industrial and professional equipment division has as its major areas of activity seismic exploration and aerial mapping. Litton has increased its per share earnings in every year since 1955. Results for the year ended July 31, 1964 were 2. 70 a share and for the six months ended January 31, 1965 were 1. 58 vs. 1. 24 in the prior period. For the full 1964-65 year an advance to 3.30 3.40 per share is expected. Acquisition of Royal McBee and Hewitt-Robins will probably bring Litton's 1964-65 sales fairly close to a billion dollars on a pro-forma basis. From a technical point of view the stock has a longer term upside objective of 128 an shows excellent relative strength. It is recommended for purchase in capital g'ains accounts. Dow-Jones Ind. 885. 61 Dow-Jones Rails 210.37 ANTHONY W. TABELL WALSTON & CO. INC. Th'h market letter not linn under I1U I' t he Ull ffel to I ., 01,(.11.11'11 to 1m) an) se(.untl(''' ccr, cd to hcrCII\ The informatIOn (lIHnined herein is not to H(CurUO or '1lld the fUllllhlllll- Ihclc.. r 10. lint and lIndcl 110 (I.cum.tan'cs to hc ,ol\J;trued n repr!!1;entn- hon by \VaJ9tQn &. Co. In' All CXIJrCSSlOllS uf opinion !.IC uhJc t tn (h,lIl-' \\ Ithut lIotl(,', \Vnlston &. Co, hI'. 311 QlTlcer. Director. St()('kholdelS nnn F.mpioyl'es thereof. purch\\,,,. nn,lmuy h.ne nil III the mcnhnc, helCIl! fhls mnrkel lettcr!!o Intendcrl and merl'1y 11 'l gl'IICral, mformul cotl'ln1cntllry d.\y to day marhet lind lI)t a (umJlI('tc A,\,lrtln.d IIlfmmatln With to any C('lIlllles .fcned to hercln \\i!l he CUI nighed upon request \\-. 101

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