Tabell’s Market Letter – February 16, 1951

,'-' – ' t' ,,'' II-'' f'-It,, i; ' ' ,- .'- NEW YORK S, N, Y. 35 WII Street — DIGBY 4-4141 PHILADELPHIA 2, PA 1420 Wolnut Street PENNYPACKER S59n f'-! TABELL'S MARKET LEnER LOS ANGELES 13, CALIF. SAN FRANCISCO 4, CALIF. 550 South Spring Street 265 Montgomery Street MADISON 93232 SUTTER 12700 Since early 1948, this letter has conSistently recommended the purchase of the higher grade, dividend-paying issues and as con- Sistently expres2ed the opinion that they would be the market leader; of the first phase of the advance. In the advance r; 'C' 160 in the Dow- Jones industrials in June, 1949 to the recent high of 257.06, this type of issue has been in the foreground. Spurred by demand from , — institutional investors, some of the investment growth stocks have advanced from 50 to 100 in price over a two-year period. They are f, ,.; no longer on the bargain counter. Due to higher txes, earnings in 1951 will probably be below 1950 and the price advance has brought ,' ' yields from around the 6 level to below 5 and i, some cases close to 4. Whl1e the longer term prospects remained cndimtnished, present t ,-, price levels appear to have adequately discounted this fucure possibil- l'G;, . In view of the current uncertainty, I culd prefer to aViai t a more advantageous price level for new purchases. In many cases, – , the teclmical patterns of the growth investment stocks show that they have reached, or almost 'reached, the upside objectives outlined by their base patterns. On the other hand, there are other good quality issues that appear to have not yet discounted their possibil- itc .. Some of these a secondary, more speculative issues. Others are stocks of better known companies. Whle they,too, might sell off in a market decline, they appear to have better defensive possibil ities than the issues which have already advanced sharply BEST & CO. appears moderately priced at around present levels of 31. It has a good E.P.T. base with an average of about 4.50 a share for the best three of the 1946-1949 years. Estimated . earnings for 1950 are 3.75. The stock is paying 2 annually to -, , yield over 6. The technical pattern is promising. The price range of 32-23 has held for almost fc,', years and there is an up- side potential of an advance to the 1946 high of 52 1/2. Should be bought on all dips for semi-investment holding and chances for long term appreciation. , BOND STORES has been showing an improving technical pattern of late. This retail clothing store chain expanded a bit too rapidly in the mid-1940s and the stock declined from a 1946 high of 48 1;4 to a 1950 low of 12 1/8. Company appears to have turned the corner and earnings for 1951 should top the estimated 2.00 of 1950. Company has a good E.P.T. base due to earnings of 5.93 in 1946, 5.17 in 1947 and 3.05 in 1948. The technical pattern suggests a potential accumulation area in the 19-13 range with an upside possibility of , ' 26-28 for the first phase of the advance. Buy on minor weakness. Present dividend rate is 251 quarterly. The next payment will go ex- dividend March 1st, payable March 14th. ,, UNION CARBIDE, at the recent top of 59, seems high enough for the moment. Earnings for 1950 reached a new peak at 4,31 a share. Earnings for the best three years of 1946-199 average around 3.30 so its E.P.T. exemption is only fair, The stock yields 4.3 ., ; ,, on the 2.50 dividend. Price appreciation or the near term appears limited. The stock has reached its upside objective on the techninal gauges and due to its sharp rise (for an issue of its quality) it appears somewhat vulnerable. Would withhold purchases of this ex- ,' cellent quality gro;th issue until a good reaction corrects its technical pattern. February IG,1951 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN I— Closing Averages Dow-Jones Industrials ,– Dow-Jones Rails I' , I This mllfflOroJdum if not to b. COt!Jtru.d af an off.r or ,olicltation of oU.rs to buy or HII oIInV sicurifil' From fime fo timl Waldon Hoffman Goodwin may 11.! haVI a.n intlre!t in loml or all of th Ilcuritiis mlntlned brei!'! Th foreC)oinC) aterial has been prepared by UI as e metter of i'ormation only. It 1 baled ; upon Information b.lllved rillabil but not necessarily complete, b not ;uaranteed as accuratl 0' 'inal, and h not Intended to foreclose independent inquiry -5\'7–,;,'tiJ.1 !f'Jt,\;, '1!.'– –..5''—!;- -'- -)—–,- '' ';tj ''1-' 'f,-1!-r – '-!;;;