Tabell’s Market Letter – November 10, 1967

Tabell’s Market Letter – November 10, 1967

Tabell's Market Letter - November 10, 1967
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W—-a–l-s-tlnocn—&—C–o–. MUNICIPAL BONOS UNDERWRITERS MUTUAL fUNDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges FiLE TABELL'S MARKET LETTER OFFICES COAST TO COAST AND OVERSEAS November 10, 1967 The basic market opinion expressed in last week's letter remains unchanged by the wild gyrations of the past four trading days in which the Dow twice traversed a 25-point trading range. At the low of last week, the Index had reached the 850-840 downside target suggested in last week's letter, and it appears possible that a base will form around current levels. Under these circumstances, with the market down as sharply as it has been since September, prudent investment policy would dictate accumulation on weakness of undervalued groups. One such group might well be the international oils. Not only do current prices heavily discount many of the uncertainties.connected.with.doing.business .in,the .Eastern – Hemisphere, but the consumption of petroleum and associated products within this area is rising rapidly. The importance of the Suez Canal is being lessened by the rush of leading co panies to build supertankers that will bypass the canal and at the same time be cheaper to operate. The three companies discussed below are on our Recommended List. GULF OIL (73) is one of the world's largest petroleum prOducers with operations far flung. In recent years, U. S. -based operations have been contributing the lion's share of net income. However, the company has an ambitious expansion program underway in foreign areas not only to increase production but also to broaden existing markets and develop new ones. To date, this program has proven highly successful, with the effect on earnings notice able. Compared with 4.87 a share reported for 1966, earnings this year are being estimated to rise sharply to around the 5. 50 level on revenues approxima ting 4 billion. As marketing and refining capacities increase more in line with steadily is a more completely integrated organization. As a reflect projecting 1968 earnings to near the 6 a share 0 su llfOduction, the result 1 ustry analysts are s that the current 65 quarterly dividend rate might be the minimum dun e next six months. From the technical view, Gulf Oil an . purchase for a price object- ive at 78, by a high,er()pe 'go .. on the at 65-62. ROYAL DUTCH PETROLEUM Q gh its 600/0 interest in the Royal Dutch- Shell Group of companies, is n oil enterprise. The strong position that it r as hei-e the consumption of oil is in a sharp uptrend, and the highly succ s ex , on development program it has underwal' suggests that it affords the inves t ct' pportunity for capital appreciation over the longer-term It would appear that a bi 'on of lower operating costs, higher product prices and en- larged markets finally turned earnings around. For the current year, net income is esti mated at between 4. t and 4.50 a share, vs. 4.09 last year, suggesting that a modest in- crease in dividend payments is possible. The current indicated rate is 1. 89 a share. Furthe earnings improvement to around the 4.85 a share level is anticipated for 1968. Technically, Royal Dutch has moved out of a year-long base that has built a firm area of support at 38-35. Our price objective remains at 86. CONTINENTAL OIL (76 7/8) is a relatively newcomer to the international field, larlo) gely accomplished through its holdings in the prolific North African oil fields, now accounting for more than 500/0 of total crude production. This has enabled the company to expand its Euro pean refined products marketing where the potential for growth seems considerable. In addi tion, CLL has become a well rounded energy company through the acquisition of Consoli- dation Coal, one of the industry'S largest producers. Moreover, it owns 33 30/0 of CER Geo- nuclear Corporation, formed to develop nuclear explosives for commercial application; the first of which is Operation Gasbuggy, to determine if natural gas flows can be increased through nuclear explosions. Earnings this year are expected to reach the 5.35 a share area up from 5.08 last year, and could approximate 5.70 in 1968. Chartwise, Continental has built a firm area of support at 70, slightly under current price levels. The considerable base that has been built indicates a price objective at 91, followed by a possibly higher goal around 130. Dow-Jones Ind. 862.81 Dow-Jones Rails 231. 70 HARRY W. LAUBSCHER for ANTHONY W. TABELL WALSTON & CO. INC. AWTHWLamb This market letter Is published for your convenience and information Il.nd is not an offer to sell or a aoIleito.tlon to buy any securities dll!lcussed Tb 'eetofeomrpmloaytieoens mwaays hoabvtaeinaeDd inftreormestsoiunrcoers pwUel'chbaeslieevaendtosebllethreehsaebeleu.rlUbuest rweeferdroedntoot hgeuraerina.ntee Its t.ecuraey. Walston & Co.,In.e and Its officera, dir rea IDor- WN801

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