Viewing Month: June 1970

Tabell’s Market Letter – June 05, 1970

Tabell’s Market Letter – June 05, 1970

Tabell's Market Letter - June 05, 1970
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Walston &- Co. —–lnc —– Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 100 OFFICES CQAST TO COAST AND Q\'ERSEAS TABELL'S MARKET LETTER June 5, 1970 The stock market's most dynamic short-term upside performance of the past 30 years carne, at least temporarily, to an end last week. As the final week of May drew to a close, the market had turned from an intra-day low of 627.46 on the Dow to reach an intra-day high of 703.86 on May 29 — an advance of 75 points in just three trading days. Amazingly enough, the advance was further ex- tended in the early part of this week with an almost lO-point gain on Monday, a consoli- dation on Tuesday, followed by a further advance to an intra-day high of 723. 92 at noon Thursday. Then, finally, profit taking set in with a sharp decline at Thursday's close followed-by further weakness on Friday, Southeast Asia. At Friday's intra-day bottom of 687.91, the Industrial Average had re- traced 37 of the advance from last Tuesday. We pointed out in last week's letter the totally unprecedented magnitude of the advana; noting that records were set for both the largest one-day advance and largest two-day up- swing in the post-war period. The extension of the rally on Friday and Monday also shattered records for three and four-day advances during the post-war period. And, as we suggested last week, we think the message carried by the breadth and vigor of the rally is clear-cut and should be heeded by investors. It is quite clear, in other words, that the market has entered a new phase of some sort. What is dreadfully difficult at this point in time is to be too precise about what shap that phase may take. It is, after all, only eight trading days since the May 26 low was made, eight days with a great deal of action to be sure, days nevertheless. Most technical indicators calculated to pinpoint a9rbnter dr reversal are designed by their very nature to operate with a a will, therefore, re- quire some time before any of these indicators de' ely positive. Moreover, in order to support any sort of sustained 111 have to form on the average and,most. fmP2rtantly, in time, of course, all the more so k. is cl1aracterized'oy tlie sortof wide gyratiornthat have taken weeks. Nonetheless, for a base to be truly meaningful, a c nt of time is certail iy required. And, based on historical pre e t,' b usual if such a base pha'e were complete in much less than six mo ' It is interesti to sp as to just what the upper and lower limits of a base formation might be. often, the best guide is the initial rally itself. The upper part of the base formati often tends to be within 5 or so of the rally high and the lower part within 5 or so of the low. If we assume that the initial rally had run its course last Thursday, this suggests a trading range bounded by 760 and 595 over the intermediate term. This, of course, is more of an educated guess than a forecast and will, obviously, have to be modified in the light of future events. If we accept it as a working hypothesis, however, investment policy becomes clear. Periods of weakness should now be used without hesitation to commit reserves to the equity market. Whether the base formation process will involve new lows or not, we do not know, and we think the question is essentially academic. We stated last week our feeling that the effective low had been reached last Tuesday, and this would hold true even were that low to be violated by a modest amount. We reiterate, moreover, our conviction that purchases should be concentrated, by and large, in the high-quality segment of the list and in stocks selling at low rather than high multiples of projected 1970 earnings. We repeat this advice despite the astounding performance over the past two weeks of a number of speculative issues which were sharply depressed from their 1967-1968 highs. (Ling-Temco-Vought, for example, rose 162 in a period of six trading days.) Such performances are not at all uncommon following a climactic bottom, and the astute trader can often take advantage of them. Historically, however, as a base formation proceeds, the swings become narrower, and new leadership progressively comes to the fore. As individual base formations build up, it is the task of the technician to focus on that new leadership and to point out the opportunities that are developing. It is to this task we hope to devote ourselves over what we think will be an interesting summer in the stock market. Dow-Jones Ind. 695.03 ANTHONY W. TABELL Dow-Iones Trans 142 21 WALSTON & CO. INC. Thill ma.rket letter Is published ror your convenience and InCormntlon nnd 11 not a.n 'off(!r to sell or .t solicitation to bu) nny securities discussed. The In- rannatlon was obtained from sources we believe to be rehable, but we do not gulU'antee. lUI lccuracy Walston & Co., Inc. and Ita officers, dlrecton or ml\y-ho.ve-an .and ,sell ,the,,sec\lnues ref.erred to helem. …,

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Tabell’s Market Letter – June 12, 1970

Tabell’s Market Letter – June 12, 1970

Tabell's Market Letter - June 12, 1970
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11 ! Walston &Co.—..;..,,; Inc. ., Membe New York Stock Exchange and Other Principal Stock and Commodity Exchange, OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER June 12, 1970 In our letter of May 29, we used the following language. It is, in summary, our judgment that the effective bottorp has been reached. The use of the word effective is cal- culated. It would not be without precedent for the market to move back to or through the old lows. Indeed, in every base formation that has occurred in the past, a testing of the lows has taken place and in some cases, June, 1962 being a typical example, that test involved the penetration of the former low by a significant amount. It was our intention, at the time, to s'xike the positive stance which we felt events warranted without succumbing to the euphoria induced by a three-day, 75-point rally. We were, in short, attempting to convey the impression that a new market phase had been en- tered .without suggesting thatall the market's .troubles.were.over. May lows was the precursor of a new bull surge. .rC\.l1y.from v' .- -. . – – Now that the rally has run its course, and the market has spent the past week declin- ing, the familiar miasma of gloom has slowly begun to return to the financial community. And yet, the outlook, of course, is unchanged from what it was two weeks ago. Without offering any judgment as to the short-term course of the market, it is possible to say today, as it was then, that high-grade stocks are and will continue to be buys on further weakness. Whether the May 26 low of 627.46 will be penetrated remains, to our mind, an academic question. From a technical point of view, ability to hold at around the 670 level would be constructive. 670 happens to be the downside objective of the top formed during the first week in June. It also happens to be a 50 or normal retracement of the May-June advance. This is all interesting to the technician but should tess so to the investor whose basic strategy should now be the g, eakness. Such selection is, at the moment, we think, a difficult r 'ri certain amount of in- tellectual gymnastics, for the criteria for stock is, feel, in the process of changing. A year or two ago the watchword U,,..,w.estern movie, consisted of good VWqu-arterto qUi t he investment world, like the er were deemea unworthy of in sensible portfolios. any price , ,.J, if a company's earnings were growing at 20 a b heap at a 100 pie sinc, hat was only 10 times results 13 years h c. a lscovered, to our sorrow, that earnings growth is mercurial, uncerta s suredly not worth an infinite price. Could it be perhaps that we will discover e co ary — that, at some price, even those companies with no m-M,ospects and with highly visible problems become cheap. Some example come to mind. Chrysler Corporation, as everyone knows, makes automobiles and, as almost everyone knows, is in some financial difficulty having lost 61 per share in the first quarter of 1970 and probably slated to do little better than break even for the upcoming quarter. Little improvement is expected before the final quarter and, for a number of reasons, it would be optimistic to assess the 1971 outlook as wildly encouraging. And yet, Chrysler earned 6. 23 per share in 1968, and had an average earning power of clo to 5.00 a share in the 1963-1968 period. We are not suggesting that Chrysler is a premier growth company; we are merely noting that 20 is not a terribly exorbitant price for a COml)alolll which has demonstrated this sort of earning power and might very possibly be able to do so again before too long. Or let us consider I,itton Indust.ries whicp the market was sna.pping up for years at 20 to 40 times earnings before it committed the unpardonable sin of having its growth curve flatten out slightly. The stock down from 112 to 17 is now available at around nine times 0 estimated results for the year to end next month and is, at the moment, not a very different company than the one it was two or three years ago. Or indeed Occidental Petroleum, whose problems can be summed up in one word, Libya. We are not exactly bulls on the Middle East outlook, but, if one were to totally eliminate all of OXY's Libyan's earnings, the pi e ratio would still be under 10. With the market down as far as it is, quite obviously, examples of this sort of thing abound. We are in an investment climate which emphasizes problems and ignores values, and we do not think it unreasonable to point out that such situations have seldom lasted long. Dow-Jones Ind. 684. 21 Dow-Jones Trans. 138.27 ANTHONY W. TABELL WALSTON & CO., INC. AWTl'Iln ThiS market letter if! pubhshed for your convemence and information ant.! IS not an OffCl to or d llollrltatlOn to buy any .seCUTitles lhscussed Th formatIOn was obtained from sources '01oe bel,t'\e to be rehable, but do not !(Unl antee Its accunl(.) alston & Go., Inc and its officers. dlr toe In- employet!1I me.y have an interest in or IJurchMe and sell lhe secunUl.'s rderred t() hel',\' ec rs or liaiidi'JUdiriIWilW'.'lilli,.mLI,iil bilild lilNti tiiiiiLiE Eli. iL IIEII' II ,;,., ,. .. i ,. j, dO .,

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Tabell’s Market Letter – June 19, 1970

Tabell’s Market Letter – June 19, 1970

Tabell's Market Letter - June 19, 1970
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-' ….. /, /.; ..,….0;0- .. -………….. Walston &- Co. —–lnc —– ,-,,;-..;;— '1' \, Members New Yor' Stock Exchange and Other Principal Stock and Commodity ElChanges OVER 100 OFFICES COAST TO COAST AND OVERSEA.S TABElL'S MARKET LETTER June 19, 1970 W1th a new surge of strength, the market moved ahead last week, the Dow-Jones Industrials reaching a new high at 728.23 on Friday. Strength was variously attributed to a slowed rise In the cost of hving, the British elections, and an anticipated nse in the short interest which, indeed, materialized when the NYSE annoumed a 230/0 increase after Friday's close. However, figures on mutual fund activity during May, also released Fnday, were disappointing, showing redemptions almost equal to sales for the first time in the history of the industry. Funds, however, were net sellers during May, raising their cash position to over 10 of net assets . . – While time'will' be required'to sort'out thesedevelopmentsffior-e-and,.more.stoe-k., – as the market progresses from the May 26 low, show evidence of improving technical action , and continue to present attractive investment buying opportunities. One such issue is review i ed below. PHILLIPS PETROLEUM COMPANY Current Price 26 3/8 Oil 1S where you find it, is an adage long in Current Dividend 1. 30 use in petroleum c1rcles. But finding it and getting I Current Yield 4.9 it to market are two entirely different-colored Long Term Debt 787,413,000 birds. While many companies are optimistic about Common Stock 47,041,043 shs. huge oil deposits they believe they have discovered Sales-1970 Est. 2. 35 billion hiding deep beneath the dreary arctic wastes, the Sales-1969 2.20 billion problem of getting t consuming markets Earn. Per Sh.1970-E. 1. 85 has yet to be co e e salved. Phillips Petro- Earn. Per Sh.1969 1. 73 leum, one g t 'nternational petro- Mkt. Range 1970-69 38 3/4 – 20 leum arctic program through its 48 interest in Pacific 11 n' ortant stake In this a., and will benefit once the problems have been solved. I ' – -ea-that-attr-ae-ts-ourimmediate -,' attention to Phillips. The recent ares stems from development of the ' company's properties in the 'n where production capacity of a newly-dis- covered field could be a 6 0 0 o't million barrels daily. Phillips' interest in this field'is 37. e t a ' w' appetite of oil hungry Europe, just a short pipeline distance away, sug ns market. ' ' . Phillips has in rest other areas such as Venezuela, Iran and North Africa; Recent important discov 'es in Nigeria, offshore New Guinea and offshore Egypt are addi- tional plusses. Dome ically, Philltps is a leading integrated oil company and is one of the most broadly based In the industry, with important representation in natural gas liquids, ; petrochemicals and plastics. Being one of the largest producers of natural gas in the con- f;. tinental U. S. A., Phillips should benefit from any increase in gas rates,. action toward which, already is underway. Its Pacific Pete Interest is a further important factor in long-range natural gas production and distribution. The earnings performance in recent years has been sluggish. However, the prospect for more rapid improvement are now favorable, although higher taxes and increased costs will have some dragging effect on 1970 results. Despite this, however, mit per share shoulq', rise to around 1. 85, from 1. 73 last year. Continued firming in the LPG area arid more .. favorable chemical prices augur well for the 1971 outlook. Looking further'doWn the road,a' leading advisory service makes so bold as to suggest earnings in the 3 to 4 a share area by 1973-1975. Dividends, which have been raised annually since 1961, should parallel this gl'owi.h, . Technically, the years of unsatisfactory earnings performance have enabled Phillips to build a base of considerable breadth extending from the Jow-20s to around the mid-30s, 'I'h\s enables an initial price projection at 37, followed by a f,fgher objective 111 the low 50s. On the downside there would ppear to be a minimum risk fnctor;' conSidering the extensive Rupport recently built into the 24-20 range. Already in the Quality & Long Term Growth section of our, Recommended Li st, we feel that Phillips Petroleum is again an attractive purchase for accounts .seeking attractive . longer-term investment potential as well as for those accollnts seekirig well-defined inter- mediate term appreciation, Dow-Jones nd, 720.43 ANTHONY W. 'l'ABELL – HARRY W, LAUBSCH Dow-,Tones Trans. 139. 87 WALSTON & CO, ThiS market letter 19 published for )Qur convemence and mformAtlon nnd IS not an ofrer to sell or ,\ to huy Rny &e'C\lrlties Ih!!,cussed The In. A forrnlltion was hobfftlarmfTeld from mtere fl st OUfl'eS In or We believe t Jlulchll.Se fJ.nd o bl sell t rehabll'. but he qeCurLtlC we do not v,uarlmiE'e referrcrl to hl'ICil' its Walston & Co Inc. .R,nd Its offict!rs. directors or J -; , – …..roo .. ' .-…… ….., -. ..'

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Tabell’s Market Letter – June 26, 1970

Tabell’s Market Letter – June 26, 1970

Tabell's Market Letter - June 26, 1970
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I- Walston &Co. —–Inc —– Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 100 OFFICES COAST TO COAST AND OVERSEAS TABELl'S MARKET lETTER June 26, 1970 The most that can be said for the market' action this past week is that it was unexciting Neither bears nor bulls were able to make much headway with the industrials, although Transportation and Utility indicies broke .to new lows. The market remains in a no-man' s land between 670 and 725, the successful breaking of either one of which would give a strong clue as to the intermediate term direction of the market. Ii MESA PETROLEUM COMPANY Current Price Current 'Dividend Current Yield Long Term Debt Convert. Pfd. Stk. Common Stock Sales – 1969 Sales – 1970 Est. Earn. Per Share 1969 Earn. Per Share 1970-E Mkt. Range 1970-69 Fully Diluted 28314 Ten years ago anyone predicting a natural gas 010—-shortage-would have been'regarded bY'industry- 0.3 . analysts as strange Today, however, this 33,581,563 type of comment is attended to with concerned 1,014,486 shs. deliberation. Why the change The problem 3,936,348 shs. certainly is not one of diminishing supply. Quite 26.9 million the contrary! Reserves, proven and unproven, 29 million 2. 14 are believed to be at record levels. The problem is that the reserves no longer are increasing at 2. 30 rates equal to the growing demand. In 1946, the 53 7/8 reserve-to-production ratio (Rip) was 321. In 1964 the RIP was 18'1, tn 1968 it was 14.6'1, and for 1970 it is estimated at 12. 8'1. Further declines in three years. Because of this trend, the FPC and the ind tr -t9recast for the next the situation to be severe and steps are planned to alleviate the probl–..-1 Plainly speaking, the ratio has been dropping co les have found the cost of drilling new wells to be rising faster than s of gas discovered. Thus, the low p!,ice expected to rlse,' whlch 1n turn IS e a J. ill' .. perati.ons !h t 1'1 rlllmg-acttvltres to price is with the result being a i supplies. It is the forthcoming increase in gas prices the t g s i ustry so attractive to investors at currently de- pressed prices. au c ar9i\i; s stry is MESA PETROLEUM, which already is in the Speculative . mended List. Mesa is engage' 1 a as exploration and development and to a lesser extent in contract cattle feeding. merger with Hugoton ProductIOn put Mesa into the natural gas big leagues. Reser constitute the largest package of uncommitted natural gas m the mid-continent area, roughly one-half trillion CUblC feet. Hugoton's output goes largely to intra-state customers, most important of which is Kansas Power & Llght. The agreement to sell KPL an additional 850 million mcf. of gas for an estimated 200 million has not yet been finalized. This will delay shipments that had been slated to start at mid-year. This means that an important earnings jump will not come untill971. The stock recently de- clined due in part to this delay as well as to the blocking of MSA's attempts to control Southland Royalty and lower than anticipated margins in the cattle business. Despite this, however, earnings are expected to show improvement to around the 2. 30-plus level, vs. 2.14 last year. It is in 1971 that an Important jump in per share net income is anticipated. Mesa pays no income tax on its earnings due to tax loss In view of its steadily growing reserves, its favorable position with respect to rate regulation and conSidering the steadily worsening RIP ratio of the industry, which in turn is almost certain to bring about highly deslrable price hikes, the shares of MESA PETRO- LEUM appear to offer the investor a reasonably-priced vehicle for capital appreciation over the years ahead. Technically, MESA has dropped almost 50 from its 1970 high bringing it near an area of support that exists in the low 20s. Downside risk from current levels, therefore, seem limited to the 25-22 range, while on the upside we have price obJectives in the 36 to 42 range, initially, followed by higher longer-term readings. Dow-JonesInd. 687.84 Dow-Jones Trans. 126.75 ANTHONY W. TABELL – HARRY W. LAUBSCHER WALSTON & CO. AWT -HWLmn Thill market letter Is published for your and mformAtion nnd IS not an ofter to sell or a sohcltntion to buy IIny securities lhscussed The an. formation was obtained from sources we beheve to be rehable. but we do not g\lRranlee Its ;J,ccurRC Walston & Co. Inc. and lts officers, dlrectors or employee!'! may haVe an interest In or JJurchase and sell the securities referred to helen'. WN.801

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