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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