Tabell’s Market Letter – September 12, 1969

– Wdlston &- Co. —–Inc —- Members New York Stock Exchange and Other Pr;nc;pal Stock and Commod;ty Exchange. OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER September 12, 1969 The Dow-Jones Industrial Average made its fourth assault at the 840 level this week and, for the fourth time, was set back. After making an intra-day low of 804.45 on Tuesday a sharp rally set in at mid-day followed by the 12-point Wednesday advance. After an llltraday high of 838. 50 on Thursday, however, the market again turned down, followed by further weakness on Friday in response to resumption of B-52 raids in Vietnam. All of these short-term swings are, of course, conslstent wlth our theory that the market is undergoing a process of base formation which wlll continue for some time. During such a period a great many attractive stocks become available for purchase on weakness. A few of the- issues on buying on market dips;earenevtewedbelow. CLARK EQUIPMENT (31) turned in an excellent earnings performance in the first half of 1969 with six months net reaching 1. 53 a share vs. 1. 00 in the comparable 1968 period. For the year w' would expect earnings to rise to 3.00 vs. 2.45, and, although reduced capital goods spending next year may prove a mild depressant, we would expect further lmproved results in 1970. The stock is currently available at an historically low multiple of ten times estimated 1969 earnings and has sold at 14 to 17 times current earnings at some time during every year in the past decade. The stock has a long-term obJective of 61,and there is strong support in the 30-28 area. DART INDUSTRIES, INC. (46), formerly Rexall Drug & Chemical, presents an in- teresting growth picture. The most exciting aspects of al(Y the direct selling an consumer products groups, including Tupperware plastic 0 osmetics marketed door-to-door as well as West Bend products and i gs. ese groups account for only 33 of sales, but 66 of profits. These t ass container group, will become more important as agreement in ached to sell Dart's ethical drug division to Minnesota Mining. has fallen through;-but there-is-no-'re 0 0 t, fr ise and retail drug operations l that'thts-op-e-ration win be-dtspo-sed- – of at some time in the future. at 2. 25-2, 35 vs. 1. 91, and we would be a buyer of t e sto 0 FIRST CH T F y mo llltO the low 40' s. 7) is the outstanding technical performer in an out- ! standing group, the 'ngs & Loan issues. The stock has maintained a consistent uptrend all through th rket debacle, and continues to have a long-term objective of BO. It is the largest of &L holding companies, and owns the second largest association in the country. Earm gs growth based on the strong underlying demand trend for homes in Califorma is expect ed to continue, and yields on new mortgages should remain high. Savings flow, of course, remains a questionmark, but FCF is not dependent on out-of-State funds, having developed a strong local base. For 1969, earnings are expected to reach a record 2. BO-2. 90 level vs. a depressed 1. 81 la-st year. We would be a buyer of the stock on dips to the low 40' s. PARKE-DAVIS (32) has, for a long time, been included in our Recommended List and during most of the period its market performc,nce has been somewhat less than stellar. However, it has come into its own in the bear market of 1969, proving, by-and-Iarge, resistant to the sharp drop in stock prices. During this process a substantial base has been formed indicating that it 'may 'soon reward- the patience'of its holders. 'Recent earnings declines in Parke-Davis have been due, of course, to the decline in profitability of nO-Iongerpatent-protected Chloromycetin, and from a peak of 2, 20 in 1965,earnings dropped to a nadir of 1. 25 in 196B. 1969 results are expected to begin a recovery and could well approach 1. 40-1. 45 area. Accompanying this could be a return to the growth multiples which were characteristic of the stock before the Chloromycetin difficulties began. We would be a buyer in investment accounts. Dow-Jones Ind. B24.25 Dow-Jones Rails 19B.45 ANTHONY W. TABELL WALSTON & CO. INC. AWTamb ThiS mnrl.et, letter IS Jlubhshcd for )OUr o.!onvenH'nr(' and mformatlOn m,\ Ito not ;\11 olTeJ tn sell 01 ..I. SOlll'll,ltlO1l W 1IU\ ,In) !,,,Ulltll!'!. rhscusscd The In. formation '1\; obtnJncl from SOUt.(' ,\(' belwv(' to be r('hnbll' Lut \\( do not In!.lrantet' Its finUr,!,), \\nbton IV Co, Int. Jlml lh nffic('r'/, rhrt.'Ciors 01 employccs may hnvc an mtel cet lfi 01 !lUI lind '1ell thc I CrCI L'(l tu WN.SOI