Viewing Month: June 1966

Tabell’s Market Letter – June 03, 1966

Tabell’s Market Letter – June 03, 1966

Tabell's Market Letter - June 03, 1966
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Walston &Co. Inc INVESTMENT BANKERS MUTUAL FUNDS MUNlClPAl eONDS ( Members New York Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER June 3, 1966 …… . The Dow-Jones Industrial Average dropped off sharply on Tuesday of this week, glVlng up almost thirteen points and effectively ending the sharp rebound from the May 17th low of 859.13. However, selling conspicuously failed to follow through, and stocks were off only moderately.ino-light volume on Wednesday and Thursday. A Friday rally brought the Dow back to an.iritrat1ay.high of 890.86. In last week's letter, we noted the fact that ability to hold above the 859.13 low for the remainder of this week would make the recent rise look very much unlike the typical short term rally within a major downswing. In a market under continued strong selling pre- ,-' — – generally reasserts itself quite strongly. This has not been the case to date, and continued ability to hold above the oJd low next week would reenforce the bullish implications. All this does not mitigate against the possibility which we noted last week of a new low in the Aver- ages being made. It does, however, indicate that that low might well be the bottom for some time. It remains, of course, possible (though not, we think, probable at this time) that a major downswing is underway and that the popular indices are headed significantly lower. However, we feel the investor can best protect himself against this market risk by judicious selection of securities. Let us try to make this statement a bit clearer by reference to the typical stock market cycle. In general, a stock will move sideways for a protracted period of time, forming a base before moving ahead The next step is, of course, an upward mov followed by another period of sideways movement during a top is formed. A downwardmove commences and the process then starts ov a r. 0 This is, of course, drastically oversimplifief\l 'ro s, an es are often hard t recognize. For example, it is seldom possible to 1 t a top has been formed until such time as a long sideways trading ted on the downside, and, either a subsequent rally fails to push throug 0 w hi ,or the stock remains weak for a protracted–period'of'-time-without In the light of the r p c' – is'requires-time.– —-' – – – , most securities today into four broad groups. The first which made their highs some time ago, and formed tops which w c ir d by inability to move into new high territory. These securities a i f' 1 wends and. at worst, could move lower in a poor mar- ket while, at best, t 11 e . e a long time to form a base before moving ahead. In- cluded in this category t Automobile, Retail, Food and Grocery Chain issues. The second cate includes those stocks which posted their highs more recently, but, on the recent wea ness, broke out of tops with significantly lower downside potentials. In this case, however, the downside breakouts are so recent that they have not yet been con- firmed. This category would include most of the leaders of the past year. In the third category are stocks which have just recently broken out of long term base formations and are not too far above the support provided by those base formations. These stocks provide the combination of protection against a sharp decline in the market and ex- cellent capital appreciation possibilities should the market rally. Major industrial groups in this category would include the Aluminums, certain Papers, Office Equipments, and the majority of the stocks in our Recommended List. The final categoryincludes tJ1.ose stocks which have spent the last four years doing nothing but moving sideways. These-trading areas ultimately will constitute base However, since the upside breakouts have not taken place, there is no indication of any im- mediate move. In most cases, however, downside risk is sharply limited. Stocks in this group include Steels, Rubbers, Tobaccos, etc. Obviously, the stocks in the first group should have representation in an investo portfolio at this time. Those in the second group, while they may be held by the nimble trade should be retained only by investors prepared to recognize the risk involved. It is our feelin that a combination of downside protection and long-term upside potential can best be achieve by restricting the largest portion of holdings to those stocks in the last two categories men- tioned above. Dow-Jones Ind. 887.86 Dow-Jones Rails 228.00 ANTHONY W. TABELL WALSTON & CO. INC. AWTamb Thill market letter \s Ilubbshed for your convemence I.nd inCoMnatlon and l'l not an offer to lleil or It olicitatlon to buy Any securities discussed The m (ormntion was obtnmed from BOurces we believe to l'e rehable, hut Vd.' do not guarantee Its accuracy. \Vnlston &. Co, Inc. and Its officers, dIrectors or employees may have An Interest in or purchase and fie I the securities referrtd to herein. WNSOI .-

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Tabell’s Market Letter – June 10, 1966

Tabell’s Market Letter – June 10, 1966

Tabell's Market Letter - June 10, 1966
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Walston &Co. —–Inc —– INVESTMENT BANKERS MUTUAL fUNDS MUNICIPAL BONDS Members New York Siock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS TABll1.!5…MARKELLEU.ER June 10, 1966 The stock market staged a smart rally on Friday with the Dow-Jones Industrial Aver age advancing 9.13 points to reach an intra-day high of 896.77, the best level attained since the post- Memorial Day slide two weeks ago. In doing so it followed through with a tendency of some interest, although of problematical significance, which has obtained for the past three months. For some reason, although the general trend of the market has been down- ward during the last quarter, the Dow has advanced on ten of the past thirteen Fridays. Of greater significance was the sharp rise in volume to 8,240,000 shares. On ten of the eleven trading days up until Thursday, volume had been under 6 million shares and, in- had reached.a.low-o.f.,.4,.2 60, 000 shares August, 1965. Of even more interest is the division of volume into upside and downside activity as compiled by Scantlin Electronics. At the end of last week, a ten-day total of downside volume had reached a low of just over 20 million shares, a figure not equalled since the Fall of last year. The difficulty was that upside volume, measured on the same basis, had also dropped – – – from a high of almost 60 million shares in April to a low of around 21 million shares at the middle of this week. In other words, the sharp dro.p to the mid-May lows, which produced the drastically oversold co.nditio.n previously noted by this letter, was halted, not by any concerted buying, but by a sharp decline in the heavy and per- sistent liquidating pressure which drove the market downward in late April-early May. This is all to the good. Panicky liquidation is a persistent phenomenon and tends to run its co.urse p.ther quickly. As we have already noted for the past two weeks, the drying up of this liquidation argues against substantially lower fer some time. What is needed, however, to bring the market off dead cen i 'gn of increasing up- side volume. Although Friday's actio.n could be the su pheno.menon, it is a bit early to. say that this is definitely the case. 1\ One interesting note in regard to the ume, is its relatlOnshlp to. the short interest. the short interest ratio, which consis only is or terest released by the New-York – Steck Exchange at the middle preceding 30 -day period. Thi the suppo.rt provided t gs by the average daily fer the a\, in the past, been a fairly. accurate guge of interest. In the past, a short mterest ratlO above 1. 5 ( 1 1/2 times a olume) has had moderately bullish implications, and a short interest ratio 's' g t rd the level of 2.00, or twice average daily vo.lume, is often a factor indicativ 0 major bottom. As of last May 15th, the ratio was 1. 1, a figure having neutral egative implicatio.ns. For the mid-April – mid-May perio.d, ho.w- ever, average daily volume had been much higher. With the low volume of the past few weeks, average daily vo.lume fro.m mid-May to date has been around 6.4 million shares and could decline further depending on next week's actio.n. Last reported short interest, just before the market low, was 10.3 million shares, and, if this figure remains unchanged, it will produce a short interest ratio of 1. 6. A rise in the short interest, which will be reported this week, would push the ratio even higher. Actually, the most bullish possible eventuality for the internal health of the market would be for the Averages to remain at around current levels for some time while a base is completed for a reaso.nably substantial advance. Since early May the Dow has held in an 'area bounded by, rouglUy, 904 on tlie–Upside and 866on tne dcnvnside on anflOurly basis. The present upside implications of this base are, at the most optimistic, a rally to around the 940 area which is the level at which the next heavy amount of overhead supply exists. Were the market presently to break above 904 and reach that level, a good deal of work would be required before the advance could be resumed. More optimistic, from a long term point of view, would be continued backing and filling around current levels, perhaps coupled with a move to new lows, before a major advance commences. Such action would produce a base which COUld indicate an upside move of substantial proportions. Dow-Jones Ind. 891. 75 Dow-Jones Rails 231. 24 ANTHONY W. TABELL WALSTON & CO. INC. ThiS market letter IS published for convemence I nd L!lformatlOn Rnd 1, not an offer to sell or II rollcltatlon to buy Any fle(!Unties diSCUssed The in- formation was obtmned from sources \\e bdlt'v(' to Ie rehable. but we do not Its nreuraC'v \\'Rlston 8. Co. Inc find Its officers. dLred.l'lrs or employees may have an Interest III or purchn.qe and Sf I the qeeUntLes I eferretl to hero'in WN301

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Tabell’s Market Letter – June 17, 1966

Tabell’s Market Letter – June 17, 1966

Tabell's Market Letter - June 17, 1966
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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 TABELL'S MARKET LETTER June 17, 1966 GOODYEAR TIRE & RUBBER CO. Current Price 51 Probably the most prominently featured Current Dividend 1. 25 news affecting the investment community in Current Yield 2. 50/0 recent weeks has been the sharp decline in Long Term Debt Common Stock 327,650,000 35,706,296 shs. automotive sales and resultant inventory prob lems affecting auto dealers. Under the stimulus of this news, stocks of major auto com- Sales – 1966-E Sales 1965 2,50,0,000,000 2, 226,'300,-000 – Earn. per sh. 1966-E Earn. per sh. 1965 3.50 3.06 panies have been prominent on the list of new lows. – ParadoxicaUy, at-the -sametime, companies in the tire and rubber industry, a major supplier to the automobile industry, have been reGular items on the new high list, and Price/1966-E Earn. Price/1965 Earnings 14.6 16.7 Mkt. Range 1966- 62 57 – 24 5/8 the relative action of these stocks has improved sharply in recent weeks. Technical patterns, moreover, are favorable, indicating ultimately higher levels. PIE Ratio Range 1966-62 22 – 12 There is, actually, a fairly good reason for this divergent performance. Tire sales can lJe divided into two categories, original equipment and replacement. The former, ob- viouslyenough, varies directly with automotive output. is a product of the number of cars, especially older cars, on the road. rHe be!- of autos two or more years old is expected to increase, roughly, 40/0 in 1!W6 ove 9 , n increase in 1967. \Yr; ould show a further The prospective increase in of importance to the tire manufacturers. Original equipment business . s, e obviously, c;xtremely narrow -Replacement on , Moreover, this profitability companies concentrate more and more on the marketing ium I a ou\;\-owth of the recent concern over automotive safety. . There is s . for unusual growth expectancy in the tire industry. Re- cent record producti t me eavy–m;Iginal equipment demand has placed an unparalleled strain on existing capaci with many plants operating on a three-shift, seven-day schedule, and a great deal of re lVely inefficient plant being utilized. Continuing heavy capital ex- penditures to replace inefficient plant should have the effect of improving productive effi- ciency which is probably fairly low at the current high sales level. Goodyear Tire & Rubber, which is the largest factor in the replacement tire market, should be a of all the factors mentioned above. The company's replacement sales are much greater than its original equipment volume (it is the major supplier to Chrysler, with some sales to General Motors and Ford). The company markets replacement tires through 165,000 independent dealers, distributors and stores, and 1,000 com- pa ny outlets on a worldwide basis. Recent purchases of Vanderbilt Automotive Centers and the manufacturing and retail outlets of Lee National Corporation further enhance the market ing potential. – – — – In addition to being the world's leading rubber fabricator, Goodyear derives some 400/0 of sales from chemicals and plastics, industrial rubber goods, aviation items, shoe products, etc. Foreign sales are about one-third of the total. Earnings progress has been good with an increase having been shown in seven years out of the last ten. For 1966, per share results are expected to improve to 3.50 from 3.06 in 1965. The dividend, presently 1. 25, has been repeatedly raised over the years. Present prices mark the stock at less than fifteen times estimated 1966 results, an historically low level since 1958. From a technical point of view, the stock has a long term objective of 82 and a short term projection of 66 with strong support in the upper 40's. The combination of high quality, historical cheapness and downside protection, plus a good upside potential, seem to represent an interesting investment opportunity, and we are adding the stock to the High Quality section of our Recommended List. ANTHONY w. TABELL Dow-Jones Ind. 894.26 Dow-Jones Rails 231. 96 WALSTO 0 N & C . INC . .. This market letter Is publlshedfor your convenience Hnd mrormatlon nnd IS not nn offer to lIell or R soliCItAtion to buy Rny discussed. The .n formatIOn WJUI obtained from we blh('vl' to be rehnble, but we tlo not guarantee Its nccurnc) Wnlston l.. Co. Inc. And Its officers, directors or employecll may have an mterest In or purchase nnd sell the ;ecunltes rc'erre! to herem. WN801

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Tabell’s Market Letter – June 24, 1966

Tabell’s Market Letter – June 24, 1966

Tabell's Market Letter - June 24, 1966
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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 June 24, 1966 Insofar as the Dow-Jones Industrial Average is concerned, the market remains on dead center. One possible interpretation of the action since early May is that a base is presently being built in the 866-904 range to sustain a market advance later on in the Sum- mer. Currently, the most optimistic upside implications of this base are 924-948. Obviousl the longer the market continues to back and fill around present levels, the greater this poten- tial becomes. Alternatively, failure to generate enough buying interest to move decisively through the 905 level could lead to a test of the former lows. Such a test, if it did occur, would probably be a relatively low risk buying opportunity. Meanwhile, asrepea empha -theinvestor-'sbest7pr-otection '. lies not in trying to guess the course of an uncertain market, but in making sure that the stocks he owns combine good upside opportunities with relatively limited downside risk. A few stocks in our Recommended List, which fall into this category, are discussed below. ALUMINUM CO. OF AMERICA (86), the industry leader in aluminum, continues to appear attractive at current levels. While the consumption of aluminum has grown dramatic- ally over the past years, the company's earnings have remained relatively stable as margins have trended sharply downward due to excess capacity and increasing costs. It now appears this downward trend has been arrested. In 1965, margins continued to improve as company's earnings of 3.41 were up from 2.72 in 1964, showing a much better percentage increase than sales. This should continue throughout 1966 and earnings this year should approach 4.50 – 4.75 on estimated sales of 1. 3 billion. The tight supply situation might be eased a bit in 1967 due to new production facilities coming on demand for aluminum is indicated for the coming years. T r, price increases in fabricated products, should wideW0J\-t maintain its relative industry position. 1\ gin . continued long term ith further selectiv a enable Alcoa to GILLETTE (37), the leader in the e field, appears to have suc- .. offered similar improved pro has now been captured an the W y as tio -s of this stainless steel razor blade market distribution on a national level Super Stainless blade. T i , w' he introduction of the new Techmatic razor, 'em- ploying a continuo a steel coiled in a replacement snap-in cartridge, gives Gillette representatio single and double-edge blade markets. Other divisions contributing to Gillette th include the Toni divisi()n, the Paper Mate companies, and a men's and women's etry division. A marked turn-around in earnings is now apparent. Earnings for 1966 should approach 1. 70 vs. 1. 49 in 1965. Sales for 1966 are projected at 380 million or more, up from 339 million in 1965 – the ninth successive sales increase in a row. Although the stock historically sells at a high price/ earnings ratio, we continue to fee the current price does not begin to fully discount expected improvements in the company. UNITED FRUIT (31), the largest producer, transporter and seller of bananas, has successfully begun to restore operations to the former level of profitability. This has been accomplished with the development of the new strain of Valery bananas which is more resist ant to windstorms and disease. Although banana selling prices averaged well below those of a year earlier, profit margins widened substantially, reflecting the success of this new bana Although further banana prices are likely to continue to decline, United- Fruit's costs-appear- to be declining at a greater rate. With the outlook substantially improved for the Valery banana, the company has embarked on a program of diversification through acquisition, in the institutional food service field. In April, United Fruit acquired J. Hungerford Smith &. Som- pBny which makes and markets beverage bases, fruits and flavors. United must. sub- mit to the U. S. District Court by the end of this month a plan to divest itself of properties capable of importing into the United States about 9 million banana stems a year. ,remain, however, uncertainties related to this consent decree compliance. Sales and servic revenues in the current year are expected to exceed the peak 381. 5 million of 1965. Earn- ings for the year could approach the 2.75 level per share compared with 2. 17 for 19,65. Dow-Jones Ind. 897.16 Dow-Jones Rails 231. 56 A WT RJS -amb —-ANTHONY W. TABELL WALSTON & CO. INC. .. ThiS market letter Is pubhsht!d for your convenience and .IHCormatlOn and IS not an offer to sell or II. solicitation to buy ftny M!eUrltU'!5 dl8C!USM'd. The InformnUon WftS obtamed from Bourees w(' bdleve to be Tehabll', but we do not RllRTantee its accumcy Walston &. Co, Inc. and Its officels, dlrerwTS or empIO)et'B may have an mtereBt m or purchase and Bell the bccurltics referred to herem WN.801

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