Tabell’s Market Letter – April 10, 1981

Tabell’s Market Letter – April 10, 1981

Tabell's Market Letter - April 10, 1981
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,(, ;;;'-' , TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION Of' MEMBER NEW VOAK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – ……..— – – April 10. 1981 . – -….- – – — — –'- — — . – – – —-' –; – -.'—- Some three weeks ago, in this space, we made our own contribution to celebratmg the DowIs reachmg the 1000 level by reprinting the closmg prices of each of the 30 components on six different dates which had in common the fact that the Dow had, on those dates, closed at a hIgh above 1000. The dates were in the years 1968. 1973. and 1976. along with three more recent occaSIons. The purpose of the exercise was to show the diversity in prlce actIon among the individual Dow components over a long period of time. The study, however, did nothing to illuminate the relative value of the Dow today versus the previous dates on which it had attained 1000. We have tried to suggest some conclusions In thIS direction by putting together the table below which shows the earnings and dividends for each of the 30 components for 1968 and for 1980, both being years In which the Dow closed at or close to the 1000 level. We have also shown, in the table, the percentage changes in the earnings. dividends. and the stock price. the last taken from the orIgInal study three weeks ago. Company Name Allied Chemical Corp. Aluminum Company Amenca AmerIcan Brands. Inc. Amencan Can Co. American Tel & Tel Bethlehem Steel duPont Eastman Kodak Exxon Corp. General Electric GeneaLEQodsCor.p General Motors Goodyear Tire & Rubber Inco Ltd. International Business Mach. International Harvester International Paper Johns Manville Merck & Co. Minnesota Mining & Mfg. Owens Ill. Inc. Proctor 8; Gamble Co. Sears Roebuck 8; Co. Standard Oil of California Texaco Inc. Union CarbIde Corp. United States Steel Corp. United Technologies Corp. Westinghouse Electric Woolworth Co. AVERAGE EARNINGS 1968 1980 1. 46 1. 59 8.59 6.54 3.42 13.13 4.23 4.26 3.74 3.65 2.66 2.33 2.97 8.19 2.77 4.83 7.15 13.01 1. 96 6.65 2.08 5.15 6.01 2.06 1. 93 (2.65) 2.85 2.56 1. 54 2.69 5.72 (9.82) 2.28 5.97 2.39 2.47 1. 30 1. 49 1.55 2.15 1. 36 1. 33 3.07 2.60 5.54 5.78 5.09 7.78 1. 75 7.02 8.31 10.48 3.13 5.25 2.55 7.28 1. 74 4.71 1. 29 3.60 DIVIDENDS 1968 1. 73 .60 1. 88 2.20 2.40 1. 60 1.83 1.09 1.83 1. 30 I 20 4.30 .71 1. 23 .52 1. 80 1. 39 1.10 .90 .73 .68 1.20 .65 .63 1. 45 2.00 1. 60 .85 .90 1. 00 1980 2.15 1.60 5.90 2.90 5.00 1.00 2.75 3.05 5.40 2.90 2-1-5 2.95 1. 30 .69 3.44 2.50 2.40 1. 92 2.30 2.80 1. 40 3.60 1. 34 1. 80 2.45 3.10 1. 60 2.20 1.40 1.45 CHANGE Earmngs 488 311 284 1 119 – 24 81 207 338 239 147 38 33 271 162 3 326 287 228 262 29 428 171 303 68 186 170 57 Dividends 24 167 213 32 108 50 180 195 123 -1.9 – 31 83 – 44 561 39 73 75 155 283 106 200 106 186 69 55 158 56 45 173 111 Stock Price 52 44 106 – 49 6 3 – 11 4 70 39 – – 38 – 38 – 41 -2 – 47 30 – 40 92 11 – 25 54 – 48 144 – 13 21 13 55 – 17 – 24 10 Considering the fact that the Dow average itself is unchanged over the 12 years (The average price change, equally weighted. is 10.) the increases in earning power and dividend payout are quite as- tounding. 27 of the 30 stocks Increased their earnings over the 12 years involved, and all but 2 increased their dividends. The average percentage increase in earnings was 173, and the average rise in dividends 111. These figures stand up well even when adjusted for inflation. The GNP deflator rose by 119j; over the 12 years involved. Earnings bettered this increase by a conSIderable amount, and dividends about equalled it, even at 1980 rates, considerably lower than those estimated for 1981. 19 of the 30 stocks were able to show earnings mcreases better than the rate of inflation, and 12 posted dividend increases of more than that amount. The investor who followed the smple-minded course of buying the 30 current Dow stocks and holding them 12 years ago is now receiving approXlmately equal income after adjusting for mflation to that which he received at the time of purchase. We think there are two conclusions to be drawn from this study. The first is that investors in equities over the past dozen years may, at current prices at least. have seen capital values eroded by mflation. but the income provided by dividend growth has been able to keep pace with rising prices. We think It reason- able to conclude. furthermore, that the Dow remains demonstrably a much cheaper investment vehicle today than it was at the same price a bit over a decade ago. For this reason. the Dow's recent stutter at the 1000 level. while it may, for reasons we have suggested, be easily justified technically. would appear to have relatively little justification in terms of fundamental value. Dow-Jones Industrials (12 00 PM) S & P CompOSIte (12 00 PM) 1001. 89 135.00 ANTHONY W. TAB ELL DELAFIELD. HARVEY. TAB ELL Cumulative Index (4/9/81) 1142.44 AWT sla No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, on offer or the soliCitation of on offer to buy or sell any security referred 10 or mentioned The motter IS presented merely for the convel'lence of the subSCriber While -Ne b(!lleve the sourcC of our information to be reliable, we m no woy represent or guorantee the occurocy thereof nor of the statements mude herein Any action to be token by the subscriber should be based on hiS own investigation and mformatlon Jonney Montgomery Scali, Inc, os 0 corporotlon, ond 115 officers or employees, moy now have. or may loter toke, pOSitiOns or trades In respect 10 any seCUrities menlloned In thIS or any future Issue, and such position may be different from ony views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scoll, tnc , which IS registered With Ihe SEC os on Investment adVISor, may give adVice to liS mvestment adVISOry and other customers Indept!ndently of any statements made m thIS or In ony other Issue Further informatIon on ony security mentioned h(!fcln IS avoiloble on request

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