Viewing Month: November 1965

Tabell’s Market Letter – November 01, 1965

Tabell’s Market Letter – November 01, 1965

Tabell's Market Letter - November 01, 1965
View Text Version (OCR)

Walston &Co. —-Inc —INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock and Other Principai Stock and Commodity Exchanges TABELL'S MARKET LETTER OFFICES COAST TO COAST AND OVERSEAS November 1, 1965 Most major market indices continued their surge into new high territory last week after weakness on Monday which saw the Dow-Jones Industrials close off 4. 28 and reach an intra-day low of 944.30. The rest of the week was strong and an intra-day high of 966. 47 reached on Friday. The Rails, while following the action of the Industrials, failed to follow through into new high ground and last week's intra-day peak of 238.05 was below the high of 238.70 reach ed last Friday. The Utilities also continued the irregular trend which has characterized their action since mid-September. Despite the market strength, there are, from a technical pOint of view, a number of negative items'in the Th-ese items may be summed up as follows. At this week's high, the Dow has, apparently, reached all upside objectives. The same is true of a great many individual stocks including many of those that have heretofore been market leaders. It should be noted that reaching an objective is not the same thing as forming a top. The former simply indicates that a new pattern must form before it is possible to project a major price change one way or the other. The latter indicates some degree of vulnerability, and it is significant that most stocks which have reached objectives have only formed the tentative beginnings of potential top formations. As the market moved ahead to new highs this week, volume was sharply reduced. Volume for the week was 35,980,000 shares vs. over 43 million shares last week and 44 million the week before. Thus, some loss of momentum Perhaps the most important negative feature has b tfttued deterioration of market breadth. The market has now posted a new i h in 3 secutive weeks and it is 5 weeks since the May intra-day high of 944 lle. ,in all this time, our longer term weekly breadth index has failed e igh in the Average. On a shorter term our daily breadth .index h a ally in a slight downtrend since mid negative acter of market leadership an was obvious heavy speculation going on in a number of compare the pres . factor has led a number of analysts publicly to e t peculative binge of 1961. This, of course, is ridicu- lous. It is quite true un eek ago, a great deal of market activity centered on growt favorites, many of Whl h selling at high levels based on recent earnings. However, to compare this activity the level of speculative frenzy and over-valuation that existed in 1961 is clearly unrealistic. What is worthy of note is that the market leadership may very well be slowly changing. In this connection, the following table is of interest. It shows the prices of five major market favorites and five investment quality issues at their highs of a week ago, at this week's low, and at Friday's close. It will be noted that despite the Dow ral- lies into new high ground, the five glamor issues have failecHCachieve new high territory while the investment issues have, by and large, shown similar performance as the Dow. High Low Close High Low Close 10/22/65 10t.l5-29i65 10/29/65 10/22765 10/25-29/65 10/29/65 Fairchild C. 1437/8 Nat'l Video 145 Syntex 1367/8 Litton 1217/8 Magnavox 70 1/4 1151/2 96 1191/8 1131/2 65 5/8 1221/4 1141/4 –130 r/2 1167/8 69 1/8 Amer..Tob. 41 1/4 Alum.Amer. 705/8 Minn.Mining 61 1/4 Honeywell 75 Std. of Calif. 77 7/8 403/8 70 1/2 60 1/8 737/8 77 1/4 415/8 733/8 62 3/4 763/4 77 3/4 It is obviously too early to state that a shift in leadership in the direction of blue chip issues has occurred, but such a development would hardly be abnormal at this stage of the market. Certainly it would seem appropriate for many investors to consider upgrading the quality of some of their holdings in order to improve market performance in the months ahead. Dow-Jones Ind. 960.82 ANTHONY W. TABELL WALSTON & CO. INC. Dow-Jones Rails 235.86 This market letter is pubhshed tor your convenienee And mformatlon and i8 not an offer to sell or II. solicitation to buy Ilny IlE(!Urlties diecUSM'd. The m tormatlon wall obtained from sources we believe to k reliable. but we do not gulLrantee Its accuracy W,fllston & Co, Inc and Its officers, directors or eml'Ioyee8 may have an mterest In or purchase and sell the seCUrities referred to herem ———-

Download PDF

Tabell’s Market Letter – November 08, 1965

Tabell’s Market Letter – November 08, 1965

Tabell's Market Letter - November 08, 1965
View Text Version (OCR)

Walston &Co. Inc INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS MARKEr LETTER November 8, 1965 The Dow-Jones Industrials reached an intra-day peak of 969.98 on Thursday before profit-taking at the end of the week set in and thus chalked up the fifteenth consecutive week in which a new high, above that of the previous week, had been posted. At Thursday's high, the index was in all-time high territory and some 30/0 above the previous top reached in May of this year. Yet, for many investors, the market since May has not been a particularly enjoyable one. As the Averages continued their advance to successive new peaks, the question Why stocks going up was on the lips of a good many stockholders. Indeed, a good many stocks are considerably below their May tops. This fact is evi- denced by our breadth index which, with the Dow well above its May levels, is still below its peak of six months ago. It has been a period when the stock in the Average has done consid- erably better than the average stock. However, in order to achieve real capital appreciation over the past six months it has been necessary for the investor to concentrate his holdings in a few selected issues which have led the market on the upside. Most of these issues are concentrated in the electronics, color TV, airline, aerospace and office equipment fields, as shown in the table below. May High Recent High Change Fairchild Camera 49 1/2 143 7/8 190.7 Boeing 763/8 1255/8 64.5 Zenith 837/8 120 43.1 Xerox 147 190 29.3 National Airlines DJIA 841/4 944. 82 119 3/4(\' , 9 aB \2J 2. 7 A great many of the aforementioned leaders m ntinue outperform the market. However, as we pointed out last week, a th a eached upside objectives, and it is quite possible that at this stage shifts in a shi uld occur. As suggested, it seems logical that, at this stage,.the shift in e.t rd higher-quality issuesnoted.above could continue, and that the ital appreciation opportunities, u \ gd list could provide both worthwhile capdownside protection. Those familiar with our k . 's . ded into three categories, the first of which is headed Quality a r . This segment of the list would appear to be an attractive area from 1 to se new commitments. Three of the stocks in this list are reviewed below. AMERICAN CA 1/2), which has recently moved into newall-time high territory, has done so on attractive earnings reports which indicate the benefits of diversification, a major capital program and extensive corporate realignment which began two years ago. Earnings for the nine months ended September were 2.92 vs. 2. 19, and record results of 3.60 are expected for the year. Extensive research and development efforts have placed the company in the forefront of improvements in the packaging and canning field. ALUMINUM CO. OF AMERICA (74) continues to appear attractive for what is, essen- tially, a very simple reason. While the consumption of aluminum has grown dramatically ove the past seven years, the company's earnings have remained relatively stable as margins have trended sharply downward due to excess capacity and increasing costs. There are now distinct signs that this trend is over. In 1964, margins improved for-the first time and the company's earnings of 2.72, up from 2. 27, showed a much better increase than did sales. This continued throughout 1965 and earnings this year should approach 3.50, with the trend continuing at least through the first half of 1966. The recent price increase is a concrete sig that the poor supply-demand situation has abated and the stock, presently cheap on an histor- ical basis, could well regain its status as a growth company. ROYAL DUTCH PETROLEUM (45) holds a 600/0 interest in the Royal Dutch-Shell Group, the second largest petroleum enterprise in the world. The company is a well entrenched pr;o dueing, refining and marketing operation whose operations are worldwide in scope. Recently, earnings have trended upward due to firming prices in the United States and there is now some indication that the hitherto competitive West European price situation could stabilize. Any improvement in margins could bring 1966 results to a figure well above the record 3.8 per share estimated for 1965. The stock appears attractive on a growth-income basis. ,EOWrJones dnCil..,.-. ,9,5.9., 46,,Dow-Jones Rails – 238. 53 ANTHONY W. TABELL WALSTON & CO. INC. ThiS market letter is pubhshed for your convenience hnd Information Rnd is not an offer to !leU or II. 3OIicltfttion to buy Rny 5eC!UTltlPS dlfleuss-M. The tn- formabon was obtamed from sources we bUlCve to IN relmble. but we do not guarantee Its arcuracy \Va!;ton & Co, Inc. and Its officN'! dlT('rtors or employee,; may have an interest In or purchase and sell the secuntif'S referred to herein . WN801

Download PDF

Tabell’s Market Letter – November 15, 1965

Tabell’s Market Letter – November 15, 1965

Tabell's Market Letter - November 15, 1965
View Text Version (OCR)

TABELL'S Walston &- Co. Inc INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL SONDS Members New York Stock Exchange and Other Principal Stock 'and Commodity Exchanges OFFICES COAST TO COAST ANO OVERSEAS MARKET LETTER November 15, 1965 GILLETTE COMPANY Curreht Price Current Dividend Current Yield Long Term Debt Common Stock Sales- 1965-E Sales- 1964 39 1. 20 3. 10/0 None 28,390,730 shs. 340,000,000 P98,960,000 Sweet, in Shakespeare's words, are the use of adversity. Adversity, especially of a temporary na ture, often provides buying opportunities in the stock market and this is, we believe, currently the case with Gillette Company. As recently as 1962, Gillette had to be conside ed the very model of a modern merchandiser. The s, Earn. per sh. 1965-E Earn. per sh. 1964 1. 55 1. 33 a necessity in every American home, was relatively easy to make, and would, one would think, be the focu of intense competition. Yet, by dint of product supe- Currrent Range 1965-64 433/8-251/2 riority, effective promotion and advertising, and an untarnished reputation, Gillette held, in 1962, an astounding 900/0 of the total double-edged razor blade market. Nor had the company achieved this pre-eminent position by scraping by on razor-thin profit margins. Indeed, in 1961, of the 500 largest industrial corporations in the United States, Gillette ranked third in terms of return on sales, operating income as a percentage of sales running as high as 350/0. Then came the debacle – – in the form of a razor blade made of stainless steel and first imported into this country by a little-known English manufacturer of garden tools. The stainless steel blade, with its superior shaving quality shaving market by storm, and Gillette, delaying its entry i t could achieve the proper quality control, and the vasr01u t fa' blade life, took the s market until it es it would require, found itself, for the first time, losing ground to its nwj6)j' com ors. AltYiough sales conti- nued to increase, profit margins dropped 70/0 in 1964 and per-share earnings declined from 1. 60 in 1962 to r a . In the face of the uncertainty, the 1964-fo1 '25- r/2 vs-a -r961 high e;There is now evidence, 0 situation has begun to stabilize. It appears that the stainless stee b 'eved its maximum market penetration and Gillette' share of the total . s et also appears to have leveled out. Starting with the last quarter 1964, ter- uarter earnings comparisomfor the company again became favorable and for this have started on the ro rnings should improve to around 1. 55 per share. Gillette may ck to pre-eminence. Helping it along that road, will be two new products recently introduced. The first of these is a ne.w stainless blade, to be sold at a higher price and evidently of even better qual- ity than existing stainless blades. The introduction of this product is highly reminiscent of Gillette's 1959 introduction of the Super Blue blade which brought to it the lion's share of the blade market which it enjoyed in the early 1960's. Another new and perhaps even more dramatic product is a new type of razor utilizing a replaceable cartridge with a continuous band of stainless steel. This razor will mark Gillette's first entry into the single-edge injector market, a market estimated to account for a quarter of all U. S. blade' sales. In short, it appears that Gillette's growth over the next few years could come not only from world-wid growth in razor blade also by the company's carving out a large slice ofJhe.blade market it had lost with the introduction of stainless – Meanwhile, the company continues to do well in non-shaving areas. Its Toni Compan Division, despite declining sales of home permanents, has increased profits with such toilet- ries as Adorn hair spray. The company's Right Guard is a leading name in the deodoran market, and the company is also a leader in shaving cream and hair grooming products. Its Sterilon Division is a profitable producer of disposable hospital supplies. From a technical point of view, the recent upside breakout from the long 1962 -1965, base between 40 and 26 indicates an upside objective of 80 with support just under current levels. The 1. 20 dividend provides a 30/0 yield and the stock is considered attractive for pur chase in capital gains accounts. It is being added to our recommended list for quality and long term growth. Dow-Jones Ind. 956.29 ANTHONY W. TABELL WALSTON & CO. INC. Dow-Jones Rails 238. 55 ThIS market letter lS Ilubh'lhed for )our And informatIon find 1'1 rIOt nn offer to sell or ft 8OI.iclWion to buy Rny aecurltlCfl dU!Cll'lSed The In. formation WfiS ObtfllRCti from we hdi('v(' to I, rehahlt', hut we do not Its RlCur.IlY Walston & Co., Ine. nnd lls officcls, hrt''tors or employcc'! may have an mlerest In or purchase and sell the selUrltl('5 refctrcd to herem. WN.301 ,( ,

Download PDF

Tabell’s Market Letter – November 22, 1965

Tabell’s Market Letter – November 22, 1965

Tabell's Market Letter - November 22, 1965
View Text Version (OCR)

,——— ————– Walston &- Co. —–Inc INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONOS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER November 22, 1965 Tis a long road that knows no turning said Sophocles some two thousand years ago, and his thinking is often reflected by market forecasters who, after a protracted rise, tend to ask themselves rhetorically Is the bull market over At such times, as is the case tOday, the punditry profession finds itself equally divided between those who predict the everlasting continuance of the uptrend, and those who foresee economic Armageddon. Currently, it is less quotable but more descriptive to say that the evidence is not yet entirely in. To begin with, if we are to talk about the demise of an upswing it is necessary to define just what upswing we are talking about. The Dow-Jones Industrial Average reached an intra -day-pea!s. 2C96fl. 98 the culmination of.!\\7p-, rises, the long term increase which began in 1962, and the shorter–term uptrend which com- menced in June. From a timing point of view, it must be said that both upswings have been with us for an uncommon long time. The long-term bull market has been in effect for some forty months now, and it is the longest such expansion on record in the post-war era. The short-term up- swing which, to its high, continued some nineteen weeks without a substantial correction, has also been fairly protracted. It should be noted at this point that the trend channels which defined both rises have now been broken. The uptrend line from the October 1962 lows was broken in the June decline and the uptrend line from the June 1965 lows was broken on the weakness of a week ago. Equally discouraging is the action of market breadth on both a short term and long term basis. As noted recently in this letter, our longer term breadth index has consistently refused to confirm the new peaks made in the averages market breadth has continued in the same moderate cWovntr n t o.cOn a short term basis s aracterized it since mid-October. It is argued in some circles that breadth indic s ve I validity today when they are followed by a large number of they did 10-20 years ago when ibis letter of the few va -decline argument seems specious. A declining breadth – e 1 s t- simple fact — that fewer stocks are supporting a market advance. e aware of that fact does not, it seems to us, make it easier to ma e In which very few stocks are going I1P. The dearth 0 s c e – confirmed uptrend is patent. The market has had two recent correch n- ber-December 196 and one in May-June of 1965. Yet the number of stocks er Ie to (a) hold above their November-December lows in June of this year and, (b) achi a new high on the recent strength is minuscule, amounting to on1 396 of 1147 issues rec y surveyed by this department. However, despite poor breadth action, volume statistics continue encouraging both on a short and long term basis. Our longer term indices of total volume and of upside volume both achieved new highs last week and these indicators generally top out well in advance of any market decline. On a short term basis, upside volume, as measured by Quotron, has been declining ever since early November, but what is encouraging is the failure of any volume to develop on the downside. Similar action occurred in May and June of this year and in this cas of course, the selling pressure eventually did develop. But until such a downside pressure occurs, it is difficult to become overly pessimistic about the present market. Another mildly encouraging factor is the action of low-priced stocks Until just re- cently the rise in most low-priced stock indices had been moderate and just about paralleled that of the Dow, even with the recent increase in activity in the low-priced area. The total rise in the Standard & Poor's Low-Priced Stock Index has not exceeded the rise in the Dowb a margin as great as that normally seen in most upswings This would indicate that, for the agile and nimble speculator at least, there is more room for capital gains in the low-priced area. In summary, as we noted above, the evidence does not appear to be entirely in. One all-important fact must also be noted. A mild skepticism about the continuance of the long rise we have enjoyed is not to be equated with pessimism. The most typical experience of the post-war era is for sharp rises to be followed by long consolidating markets which ultimate1 lead to higher levels. There is no reason at the moment not to believe that the postlude to th recent upswinglwilh-be-,similar..in character. Dow-Jones Ind. 952.72 Dow-Jones Rails 237.08 ANTHONY W. TABELL WALSTON & CO. INC. This market letter is published for your convenience And anformatlon and Is not an offer to sell or … solieltatlon to buy Rny eeeurities dlscWl8ed. The information was obtamed.from 80urces we bdieve to bE- rehable, but we do not guRrantee its accuracy. WRiston & Co, Inc, and lts offieers, directors or emJ'loyeel!l may have an mtereat in or purchase and sell the securltles referred to herem. WNSOI — – –

Download PDF

Tabell’s Market Letter – November 29, 1965

Tabell’s Market Letter – November 29, 1965

Tabell's Market Letter - November 29, 1965
View Text Version (OCR)

Walston &- Co. Inc INVESTMENT BANKERS MUTUAL fUNDS MUNiCIPAL 80NOS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER November 29, 1965 The Dow-Jones Industrials declined sharply on Monday and for the remainder of the week tried unsuccessfully to retrace this loss. This was the fourth consecutive week the In- dustrials posted a lower weekly closing, the first such occurrence since the recent May-June decline. However, immediate downside risk is small and appears to be limited to the 942 -936 area. Coincidentally there is support present in the 940-924 area. To date, the market has shown an unwillingness to decline. We must regard the action of the Averages when these downside objectives are realized as an indication of which way the market will move from that level. Investment performance and protection against anticipated wide swings in the Aver ages should be determined by stock selection. Two securities on our recommended list we 'feel-continue to- pres entattra ctivevarue afcurrenrleveIs are revteweirbelow. .. . .,. Walt Disney Productions (53 1/4) appears to have technically corrected the sharp mJV'e which brought it from a low of 36 7/8 in mid-1964 to a high of 59 in May of this year. At the June low of 44, the stock had reached its shorter term downside objective just above a strong support level and now appears ready to post another thrust into new high ground. Actually, the decline reflected trepidation that record results to be reported for the ear ended September 1965 were largely a flash i'1 the pan due, as a direct result, to the flood of revenues from the amazingly successful Mary Poppins. There is reason to believe that this will not be the case. For the year just ended Disney's results will approach the 6.00 evel. HoweV r, there are a number of circumstances which should preclude any serious de- cline in earnings next year. First of all, a large number of potentially successful releases are on the agenda for the 1966 fiscal. That Darn Cat, Christma s time and could be an important contribution to e ni will be released around nt/mber of other pro- uctions, including a re-release of the highly a i ' a e he 1966 schedule. Income from Mary Poppins, especially from foreig ase,' continue to be realized in the coming fiscal year. Also, The orl Co continues to be among the top TV shows. . .. . . cellen .and.pLofits .. 1966 revenues should be attractions imported from the New York World's Fair. The 400 acres near Orlando, Florida, in order t develop a second park du n ast. The proJect is expected to cost 100 million. Target date for co e . c ed until early 1969. Although rewards are still away off, the long range po t oJ ect is indeed encouraging. We have always ref ed to regard Disney as an asset-building enterprise. Most suc cessful films, although f written off, have a grea t deal of value in the re-release market. This is especially true of children's movies for which, in effect, a brand new audience comes along every few years. Thus, we regard Mary Poppinsas an important asset to be added to the Disney balance sheet. With current prices ma rking the stock at less than nine times fiscal 1965 earnings, and with fiscal 1966 earnings likely to hold around this level, the stock contin- ues to appear attractive. General Dynamics (53 3/4) has traveled a long road since the deficit years of 1960- 1961 when the ill-fated Convair commercial jets caused the company to post a loss of 17 per share over a two-year period. In the interim, management has been re-aligned, long term deb has been pared from 150 million to 92 million at the end of 1964, net working capital has in- creased four-fold and the current ratio has doubled. Reflecting this success, the stock was restored to a dividend basis eqrlier this year. . , ., Yet, to our mind, the improvement in 'the company has been only partially reflected in he price improvement in the stock from a 1962 low of 20 to a recent high of 55 1/4 which compares to a 1957 high of 685/8. Pre-tax earnings have been in a rising trend over the pas four years. With this year's pre-tax results just about equalling last year, this year's fully- taxed earnings could reach the 4.15-4.25 level vs. 3.77 in 1964. The most important thing bout these projected earnings, however, is that they reflect only a minimum of profit contri- ution from the F-111 contract, which should be one of the largest and most profitable single awards to any defense manufacturer in recent years. Company has received an initial contrac covering 431 aircraft, and the final value of this contract is expected to exceed 1. 5 billion. It could indeed be argued that General Dynamics at some twelve times 1965 ear-nings is cheap on the basis of its current representation in nuclear submarines, atomic power acti- ities, space sciences and electronics. When the potential revenue from the F-111 is added to 11 this, the stock indeed appears attractive for capital gains purposes at current levels. Dow-Jones Ind. 948. 16 Dow-Jones Rails 242.33 ANTHONY W. TABELL WALSTON & CO. INC. WNSOI

Download PDF