Viewing Month: August 1968

Tabell’s Market Letter – August 02, 1968

Tabell’s Market Letter – August 02, 1968

Tabell's Market Letter - August 02, 1968
View Text Version (OCR)

Walston Inc. &Co. Memben New Yor! Stock &chang8 and Other Principal Stock and Commodity &chang8s OVER 100 OffiCES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER August 2, 1968 The price erosion which has been the dominant feature of the market since early July continued unabated last week with the Dow-Jones Industrial Average reaching an intra-day low of 865.19 on Friday. As mentioned in last week's letter, there are two sets of possible downside targets for the Dow. The most conservative projections center around the 870-860 level, while the more pessimistic are in the area of 850-840. At the week's low, the Dow wa approaching the upper part of the range suggested above. Paradoxically, a decline to the lower part of the range, i. e. , to 850-840, would be more constructive for the longer term than a rallying tendency from around current levels. A con- would bring most down to the down.sie objectives of their July tops and eliminate the possibility of these tops being broadened so as'to indicate'still lower downside targets. A short-term upswing at the present time, however, would give no definite clue as to the intermediate-term trend until the heavy supply which now exists at 890-920 was finally breached. On the plus Side, it must be noted that all of our short-term indicators are, currently, in abnormally deep oversold territory, and any further substantial declines would put these indicators in a position to give the sort of signal seen at only major turning pOints. The ob- vious conclusion is that regardless of what develops, there will be available abundant attract- ive bu ying opportunities on any move slightly below current levels.' These opportunities will be found in stocks that have reached short-term downside objectives, and likewise in groups that have been resistant to the decline, such as the SAVINGS & LOAN issues. These s!ocks have been among the better market ing not only the apparent peaking out in interest rates, a re lt recent weeks, reflect. tax increase and th expenditure control law, but'also optimism over addition, savings, which have been added to S&L sa . t0 uilding industry. In co sates well below that of -1967, are expected to accelerate later this yeaCorn g. vor the industry's prospects are the improved trend of delinquencies and ssio and reduced interest expenses, as cweJJ.-,!s new,avenues of geranddi'Y'ersification.activ.ity.'I'JVSl of the more attractive, current List, and suitable for long-pull invest ment purposes are FIRST CHARTER I 2 8(- Largest of the publicly-owned savings and loa holding companies approach the 2 billion savings deposit level by late ., .1.9.6.8 or early 1969. ly controls'asso;i.ations with branches primarily in the San Francisco.and Lo California, areas. In addition, it is active in the insurance and real estate broker ields. With residential construction expected to pick up before the end of 1969 and under 0 a sharp revival during the next three to five years, First Charter, with branches located in areas that would experience a good share of the new homes demand, should benefit. Earnings this year are being estimated to rise to around the 1. 65 level, from 1. 42 last year, adjusted for the tax increase. Although the company has seen fit to utilize all earn- ings in the growth of the enterprise, stock dividends have been paid annually for the last 10 years. Technically, First Charter has built an area of considerable support at 32-28, indica- ting limited downside riSk. The price objec tive remains at 46-48 and stock appears to be a buy for investment-oriented accounts. GIBRALTAR FINANCIAL (33) – A medium-sized S&L holding company, Gibraltar managed to better maintain its earnings in recent years than 'ha-stheindustry in general. This trend should a 1sob e continued in the current year reflecting the sharp jump in loans made earlier;,tpis year, which in turn was a result of the fairly liquid position in which GFC entered 1968. With interest rates now easing, or at least having stopped rising, savings deposits are likely to move upward at a more favorable rate, permitting increased funds for and higher earnings .. Compared with 1. 70 a share last year, earnings for 1968 are estimated at between 1. 90 and 2.00, adjusted for the tax surcharge. As in the case of FCF, Gibraltar also pays stock dividends in lieu of cash disbursements. Technically, GFC' s chart reveals a distinctly bullish pattern extending back almost two years. A base of support has been built in the 30-27 area providing support and indicating an '–initial price objective of 44. There is a higher price goal at 56-58. Dow-Jones Ina;- 87-1. … -,. HARRY W. LAUBSCHER for ANTHONY W. TABELL Dow-Jones Rails 246.42 WALSTON & CO. INC. This market letter 18 publlehed (or your convenience and mformatlon nnd is not an offer to sell or a soliCitation to buy any securities lhscu.saed. The In. formation WaR obtained from sources we heheve to be rehnble. but we do nOl its accumc.y. Walston & Co Inc. and its officers, directors or AW'JHWLamOemDIOYee!I m!y have e,p interest m or purchase nnd sell the securities referred to herein. WNBOI

Download PDF

Tabell’s Market Letter – August 09, 1968

Tabell’s Market Letter – August 09, 1968

Tabell's Market Letter - August 09, 1968
View Text Version (OCR)

Walston &Co, ..;..,;..;;.;,;;;;.. 1n.c Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 100 OFFICES COAST TO COAST ANO OVERSEAS TABELL'S MARKET LETTER August 9, 1968 The past week's market action, unfortunately, did very little to solve the dilemma sug- gested in our letter of last Friday. The first two days of the week witnessed practically the. first sustained market strength smce early July with the Dow advancing some 5 1/2 points. This was followed by the usual morning firmness following the Wednesday close but, on Thursday afternoon, prices began eroding again and by the end of the day, had given up all their week's gains. Friday's market was a lackluster afflir, and the week thus saw a new intra-day low for the Dow scored at 863. 33 on Friday. Despite the apparently desultory action, short-term oscillators and volume studies . registered a rather clearcut rally signaJ-early'this week.–This Signal-was further reinforced by the fact that at their week's lows, the averages, and a great many individual stocks, had; reached near-term downside targets. Nonetheless, as we suggested last week, it is possible. to read lower near-term targets (i. e. 850-840 on the Dow), and a rally following a decline to this level would be more convincing than one which started at current prices. Here it must be emphasized that stock selection remains the key to overall investment performance. In this connection, it must be noted that the performance stocks of 1967 to date are, to a great extent, not the ones that many mvestors would tend to associate with the word. There is still confusion in the mmds of many who tend to confuse performance with volatility. Volatile issues can and do make excellent trading vehicles if one is agile and clever enough to catch the tops and bottoms of swings. They mayor may not make above average investment performers and in 1968, so far, many have, by and large, not done so. This is strongly suggested by a recent study of the price &fty stocks most widel, held by investment companies (as tabulated by Vickers As 0 ia ranked these fifty stocks, first in terms of performance, as e Change so far in 1968, and then volatility, as measured by the uetween 1968 hlgh and low. The two columns below the twenty best . olatility rank in parenthesis, 2E nthesls. . 20 Best Performers 0 Most Volatile -. 1 Atlantic Richfield (1) !yo Atlantic Richfield (1) 3 Occidental Petr e Control Data (19) 4 Marathon Oi . Ling-Temco (48) 5 Philip Morris (28 Raytheon CompaI)Y (50) 6 Mobil 011 Teledyne (47 7 Royal Dutch! (25) Penn-Central (8) 8 Penn-Central (7) Household Finance (2) 9 Sears Roebuck (36) Honeywell, Inc. (20) 10 Stand. Oil, N. J. (43) Boeing (49) I. 11 Louisiana Land (34) Sperry Rand (46) 12 Chrysler (14) Polaroid Corp (44) 13 Intern'l Bus. Mach. (30) Minn. Mining Mfg. (14) 14 Minn. Mining Mfg. (13) Chrysler (12) 15 Coca-Cola (31) Xerox (36) 16 Merck & Co (20) Northwest Air. (45) 17 Amer. Home Prod. (33) Bristol-Myers. (28) 18 Burroughs (18) Burroughs (18) 19 Control Data (3) Getty Oil (23) 20 Honeywell (9) Kerr-McGee (27 As can be seen, the two lists are quite different. A great many of the best performers in 1968 are well down the list when it comes to volatility. Furthermore, a glance at the left- hand side of the list will show that most of the issues thereon are of relatively high quality. Meanwhile the list of volatile stocks, while it contains the better acting issues, al so contains a large of issues which turned in a performance .. One interesting sta- tlstic is that an equal investment in the ten most volatile lssues on the llst would have Just about broken even. Moreover, if the investor had not been lucky enough to pick Atlantic Rich- field and Occidental Petroleum his volatile issues would have shown an overall 150/0 loss for the first seven months of this year. The performance pendulum in 1968 thus far has quite ob viously swung in the direction of less volatile stocks, and it is important at this stage that m- vestors take note of this fact. ANTHONY W. TABELL Dow–Iones Lnd, WALSTON & CO. INC. D market letl;(!r Is (or your convenience and mformatlon nnd IS not an offel to sell or a soliCitatIon to buy an)' securities Ihscussed The m. formation was obtl\lned from lIOurces we believe to be reliable. but we do not jfURrantee Its accurac Walston & Co Inc and Its officers, directors or t!! …..eea may have an mterellt an or JuFchase and sell the securltu's referred to helem. A'.' !'amb WN'01

Download PDF

Tabell’s Market Letter – August 16, 1968

Tabell’s Market Letter – August 16, 1968

Tabell's Market Letter - August 16, 1968
View Text Version (OCR)

——-.——— W—a-l(sntocn.-&–C-o-. Members New York Stock Exchange and Other Principal Stock and Commodity Exchange, OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER August 16, 1968 Over the past few months, the course of interest rates has been a cause of much dis- cussion in the investment community. As most readers of the financial news are aware, the price of money was, in the early part of 1968, at its highest level since the early 1920's. New issue bonds of the highest credit rating were being offered to yield in excess of 7; govern- ments were at the highest levels in years, and a tax-free return of better than 5 in ably good municipal bonds was available. Building activity was being choked by astronomical- ly high mortgage rates, and the prime lending rate of major banks was at a record 6 1/2. This stringency in credit markets, the conventional wisdom informed us, was being imposed by the in.the absence.2f a In re- cent months, this rather dismal picture has changed dramatically. Bond prices have sustained one of their best recoveries in recent years, with the Dow-Jones 40-Bond Average increasing over 2 paints to its best level of the year. The tax increase, we are told, is going to lift from the shoulders of the Federal Reserve Board the burden of restraining inflation and those august gentlemen will, forthwith, be in a position to make credit more readily available at more reasonable prices. This activity has seen its reflection, to some degree, in the equity markets where, for the most part, recent leaders have been stocks such as building, finance, savings and loans and utility issues – all of which can be expected to benefit in one way or ., another from a lower cost of money. While there exist widely divergent opinions as to the , future course of stock prices, there appears to be a universal agreement that the bedraggled bond market may, at last, be headed for better times. Let us, for a moment, assume that this may be wonder just what effect better prices for senior securities i worthwhile, then, to e common stocks. ThE question may be answered in a number of ways. eh e out in the past, in this letter, there appears to be no discernible Ion w.2 r between bond and stock prices. Indeed, the two markets over t h s tc y to have moved in entirely independent cycles which are only rarely ta e . . suggested before, the bond . -market, as best-we' can'see'from , with a periodicity of some Thus, the last time we saw interest rates at current high levels wa i that point on bonds enjoyed a fairly con- sistent bull run almost steadil a 1946. Since that time the price of bonds has I s of this year. It is worth noting, parenthetically, l that the bond decline e g a n for some 22 years now, and it is fascinating to specu- late as to whether the ce rn may not be the beginning of another quarter century of de- clining interest rates. s discussion, however,we shall leave for another place. On a shorter-term basis there does, indeed, appear to be a discernible relationship between stock and bond prices,and if it is true that the bond market has, in fact, reached an in- termediate-term bottom, the conclusion, historically, is unequivocally bullish for stocks. In the past 20 years, within the context of the longer-term downtrend, there have been six major upswings in bond prices, everyone of which has unfailingly been accompanied by a better stoc. market. Also, without exception, the upward trend in stocks has perSisted well beyond the bond market peak, continuing for periods ranging from 7 months up to 2 years. The following table details the bond bull markets of the post-war era, and the course of the stock market at the same time. Date of Bond Market Low Dec. 1947 June, 1953 Sept. 1957 Jan. 1960 Oct. 1961 Sept. 1966 Date of Bond Mkt. High Jan. 1951 April, 1954 June, 1958 Mar. 1961 Feb. 1965 Feb. 1967 Advance in Stocks Over Period 36.2 19.0 4.8 8. 7 28.5 8.4 Date of Subsequent High in Stk. Jan. 1953 April, 1956 Jan. 1960 Nov. 1961 Feb. 1966 Sept. 1967 Mos. From Advance Bond Peak , in Stocks to to Stk. Peak Peak 24 62.0 24 95. 0 19 50.8 8 19. 1 12 42.4 7 22.8 Whether the recent low in bond prices was, in fact, an important bottom, is a question yet to be resolved. If, however, this was the case, the implications are distinctly encouraging for equities. ANTHONY W TABELL Dow-Jones Ind. 885. 89 WALSTON & CO. INC. Dow-Jones Rails 250.45 AWTamb This market letter Is pubh!hed for your convemence find informatIOn nnd Is not nn offer to sell or a soliCitation to buy Rny securatles diSCUSsed. The In formatIOn WRS obtained from sources 'ftC believe to be rehable, hut we do not guarantee its lccurac). Walston & Co, Inc. and Its officers, directors or employeeB ma)' have I1n lllterest in or pUl'chftBe and sell the IfeCurltlell referred to herem. WN801 ,L – . . . .

Download PDF

Tabell’s Market Letter – August 23, 1968

Tabell’s Market Letter – August 23, 1968

Tabell's Market Letter - August 23, 1968
View Text Version (OCR)

r Walston &Co, —,;;….; Inc. —.;;… Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 100 OFFICES COAST TO COAST AND OVERSEAS lABEll'S MARKET lETTER August 23, 1968 At the moment, little has taken place from a technical point of view to clarify the somewhat muddied intermediate-term picture which the market has presented since mid- Summer. This problem can perhaps be clarified by recapitulating recent market history. The dominant feature of 1968, so far, has been the rally which began on April Fool's Day and carried most market indicators sharply upward. Both the Dow and Standard & Poor' Averages moved to 1968 highs in early May — the Dow advanCing from817. 61 to 935.68, and the Standard & Poor's going from 86.64 to 100.19. Subsequent to this the Dow failed to bettEr its May peak and, through mid-July, held in a trading range bounded by that high and, roughly, 896 on the downside. In mid-July it broke out of this range, Jeaching.a.low of 863.33 in early August, and since then has rallied into the supply area created by the origina top. The action of the broader Standard & Poor's 500-Stock Index has, in line with the di- vergence of recent years, been quite different. It posted successive new peaks in June and in July at 103.67. Also, its recent bottom failed to violate the May low, whereas the Dow moved sharply below that figure. Moreover, the July high on the broader index constituted a all-time peak while the Dow, at its 1968 top, was well below previous highs made in Septem- ber 1967 and February 1966. The central and unresolved question at the moment is, of course, whether the aver- ages will continue the downswing which began in July, or will mount an assault on their 1968 peaks. For various reasons we do not think such an assault is imminent at the moment. The base formed in the past two weeks is insufficient to current levels. There is also, in the averages and individ s target much above f( ood deal of overhead supply to be reckoned with. It would appear, a e to move to new highs must needs be deferred until such time as a broader ha chance to form. This process will require both time and price A base of this nature could form in 0 0 0 w It could take the shape of a con- solidation aLor.just st low.s…of….863.L33on the Dow and – . 95.79 on the Standard & involve a return to 850-840 on the Dow, and a concomitan e & Poor's Index in order to complete the formation. s d si!t , ioned as a possibility over the past month in this letter, is hardly I g t u erious concern. We have repeatedly stated that we se little evidence of an r e long-term uptrend from the 1966 lows, and we continue to maintain a construc 've ltion toward the general market. All of the pre' discussion of the future course of the averages, unfortunately, tends to obscure what is probably the single most important fact to be gleaned from technical analysis of the stock market at this time. That is the clearcut emergence of new leadership. The suspicion that such a development might take place was voiced in this letter at the be- ginning of the year, but it could, at that early stage, be regarded as nothing more than a suspicion. Since that time it has unfolded into a clearcut pattern. The upside leaders for 196 have been such groups as Savings & Loans, Finance Companies, Builders, Insurance, Ce- ments, Vending Machines, Oils, Rubbers, and Papers. The emergence of these issues has been accompanied by a fading of such former favorites as Electronics, Metallurgy, Publish- ing, Aerospace, and some of the more marginal Office Equipment companies. The pattern, we suspect, has maJor implications and is unlikely to be reversed over the foreseeable future. Stocks which have reached their long-term upside objectives once they begin a consolidation phase, do not, generally, emerge from that phase without the pass age of a substantial period of time. A great many market leaders of the 1965-67 period fall into this category. Meanwhile, we suspect that we will see continued above-average relative action on the part of the groups mentioned above, along with possible emergence of new, hitherto dormant,. groups whose identity can only now be guessed at. Last year's portfolio, in other words, is likely to prove as unsatisfactory in the final months of 1968 as it has been so far this year. ANTHONY W. TABELL Dow-Jones Ind. 892.34 WALSTON & CO. INC. Dow-Jones Rails 251. 11 AWT-amb This market letter Is published for your convenience and informat(1n And IS not an offer to sell or a '1ohcltation to buy an securItIes ulSCussed. The In formation WIlS obtamed from sources We helleve to be rehable. but we do not guarantee Its accuracy Wruston &. Co., Inc. and Its officers. dIrectors or employeca may have an Intereat In or purchase and sell the securities referred to herem WN801 ,- iii ;;u

Download PDF

Tabell’s Market Letter – August 30, 1968

Tabell’s Market Letter – August 30, 1968

Tabell's Market Letter - August 30, 1968
View Text Version (OCR)

Walston &Co. Inc Members New York Stock Exchange and Other Principal Stock and Commodity Exchange. OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER August 30, 1968 Now that the suspense has lifted and the candidates of both major political parties are known, perhaps the market can begin to move out of its recent lethargic state. Current tech- nical data would tend to weigh in favor of a limited corrective movement, compensating for the recent rally. As mentioned in previous issues of this letter, a return to the broader trad ing range around the mid 800' s would be considered healthy for the future course of the market, adjusting for many of the excesses of recent weeks. This correction should make available more favorable buying levels in such favored groups as, savings and loans, financials, cements and construction stocks, oils, drugs and home furnishings, all of which are expected to be in the forefront of an advancing market later this year. One issue we feel to be of C –' – – — .timely interest is discussed below. – REXALL DRUG & CHEMICAL COMPANY Current Price 38 7/8 With chemical and drug stocks starting to re- Current DIvidend 0. 30 Stk. cover from their unfavorable performance of the Current Yield 0.7 last year or so, investors again are directing Long Term Debt 80,326,000 their attentions to individual issues within these 2 Cum Conv. Pfd. Stk. 2,667, 529 shs. two groups that hold the potential of attractive fu- Common Stock 14,451,617 Shs. ture growth. Rexall Drug & Chemical occupies a Sales-1968 Est. Sales-1967 570,000,000 531,600,000 posItion of importance in both industrial areas and would appear to offer the long-term investor an opportunity for capital appreciation and growth in Earn. Per Sh. 1968-Est. 1.80-1.85.Income. Earn. Per Sh. 1967 Mkt. Range 1967-'68 411. 38/68pro2f1or1m/2a Over the la t n e s9 Rexall's . pe common e n a nearly flve-fold, equal to a 17 compound annual growth rate. Much pr as been due to the cor- porate philosophy of successfully embracing new opphMitie by providing a climate in which these enterprises could more agement.dedicated 1968 started out to be a e grow. With the company man- 10 , exall's.future potential seems br. ear!f,ar the company. First quarter results were adversely affected by a earlier level. This to e 1968 earnings bein i c i earnings almost 30 froni the yearsinon of the surtax is expected to result in full r the 1967 result of 1. 86, pro forma. Management, however, feels that ' a r gs can grow at an annual rate of between 10 and 15 and that a return to this ap rox e area of growth is likely to characterize next year's results. In the meantime, share e reflecting the optimism being voiced for the future of the company, and the disadva ages brought about by the glass strike and the surtax probably have been taken into consideration in the current pricing of the issue, especially since most of these disadvantages are considered of a nature. Rexall certainly can be considered a type of conglomerate. Its activities fall into seven major groupings Petrochemicals, packaging, construction, plastics processing, ethical drugs, cosmetics and housewares, and retail stores. The recent acquisition of The West Bend Company, an old line housewares producer, will considerably broaden REX's product line and, if its sales are included in the 1968 total, they could lift REX revenues well above the 600 million level. Recent price increase made in various areas, such as in beer bottles and several grades of polypropylene will help 1969 compare favorably with 1968 During the last 10 years, stock dividends have supplemented the conservative cash payout in nine years. With the company fully aware that its cash can do all stockholders mor good by being largely retained and reinvested in the growth of the overall concern, the dis- tribution of stock dividends is expected to be continued. Technically, Rexall has constructed a base of considerable extent in the 36 to 32 area extending back approximately one year. This base not only indicates good support in the mid 30s region, but also suggests an initial price objective in the mid-40s, followed by a higher price goal in the mid to upper 50s. For the favorable fundamental and technical indications, we are adding Rexall Drug & Chemical to the Price Appreciation Section of our Recommende List as a buy candidate for investment clients. Dow-Jones Ind. 896.01 Dow-Jones Rails 251. 11 HARRY W. LAUBSCHER for ANTHONY W. TABELL WALSTON & CO. INC. HWL'at This market letter ill pl.lbhshed for your convenumee and l'lformRtlon nnd IS not an offer to sell or !\ soliCitation to buy an' M!('untlel'l Ihscussoo The tn. format/on was obtained from sources we helleve to be but we do not guarantee its Wnlston & Co. Inc. and Its officers directors or emDloyeel'l may have an mtereBt In or pUFchase I\nd set! the secuntLes referred to herem WNBOl

Download PDF