Tabell’s Market Letter – January 28, 1955

— I Walston &Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,Idl OFFICES COAST TO COAST CONNECTEt BY DIRECT PRIVATE WIRE SYStEM TABELL'S MARKET LETTER January 28, 1955 The Dow-Jones industrial average advanced to an intra-day high of 406.98 during the week. The ability to push above to 402-403 supply level was constructive, inasmuch as it destroyed the potentially bearish head and shoulders top pattern that appeared to be forming. This does not mean, of course, that all danger of a corrective reaction has been removed, but the immediate potential danger seems to be lessened. The general market appears to be resuming the pattern I originally believed probable – namely a broad trading range. It is possible that the range for January (412.47 high – 385.65 low) may hold for quite some time. In fact, it is my opinion 10 on both sides average may of-4DD for–the hold wi th -bil.'lance' ionf an area bounded by, roughly, Th'is-wouldcbeconstruct- ive development for the longer term and would allow individual issues to seek their own respective levels. This does not mean that a stationary investment policy is in order for the balance of 1955. Quite the contrary. The selective action of the past five years gives every indication of continuing. There are many issues that appear amply valued at present price levels on the baSis of present earnings and dividends. There are also many other issues that in my opinion have not fully discounted the favorable potentials. The steel group has been the most popular group during the past week with U.S. Steel opening over five points higher on Wednesday after the announcement of a two-for-one split and a dividend increase to 4 annually. The steel group was strongly recommended for purchase in my letter of April 23,1954,at price levels considerably lower than those now prevailing; for Bethlehem Steel at 62 1/4,high 120; Republic Steel at 51 7/8, U.S. Steel at 45 CiO 1/4. In April you could have bought U.S. Steel at a yield of 6t on the then 3 dividend and at about 6.2 times the earnings of the twelve-month's ended March 31,1954. At the week's high of 80 1/2, the yield was 5 on the increased dividend, and selling at 12 times earnings on the 1954 results and ten times the estimated 7.50 to 8.00 earnings for 1955. It would 'of tnespllt' now but' Of and'the expected dividend increase now in effect, U.S.Steel has only a moderate chance for further capital appreciation over the next few months. It would appear more likely that a lengthy consolidating period may occur. This is also true of technical patterns of U.S.Steel and other steels. They are at or very near upside objectives. The oils as a group or the issues below appear to offer better capital appreciation prospects because, from a technical Viewpoint, they are still some distance away from upside objectives and, from a fundamental point of view, potential good news is still in the offing. WESTERN UNION (82) has undergone a tremendous transition in recent years. A vast research program has unearthed new techniques in the trans- mittal of written messages and the company, because of these new develop- ments, now appears to be an expanding growth situation rather than the stagnant, backward company of 1932 to 1945. The stock has a book value of 140 and has spent almost 100 a share since 1945 in mechanization and im- provement of plant and eqUipment. Earnings for 1954 should total at least 7.50 and if the present rate continues,lO or 11 earnings are possible for 1955. In that event, it appears likely that 3 dividend would be in- creased. There is a possibility of some debt refunding at a lower rate and the stock could be a possible split candidate at some future date. The stocK nas advanced quite'sharply from my original recommendation,but the technical pattern still indicates higher levels. DRESSER INDUSTRIES (40) is also a very interesting growth issue ser- ving the expanding oil and gas industries. 1954 earnings were 5.53 and the 2 annual dividend is amply covered and could be increased. The con- templated merger with Lane Viells,a growing West Coast concerr,jis construct- ive and it is possible that additional mergers could occur. The technical pattern suggests an eventual 60-70 for the stock. JOY MFG.(43) appears to be entering a new cycle of growth.Earnings for the fiscal year ended Sept. 30th were 4.08 and 1. 02 was' shown for first quarter of the new year.These earnings should be a floor. Higher sales and profits are expected in 1955.Dividends 2.50 in 1954.Technical pattern is strong and the stock is now in the 45-40 support and buying level. Price Present -2- ,S T 0 C K Recom. Frice Yield Advice Continental Motors 10 13 ,6.1 Hold for 18. , Corn Products 70-75 88 4.4 Hold for 115. Cornell Dubilier 21-22 35 5.4 Hold for 41. Dow Chemical 38-40 48 2.6 Hold for growth.Buy 45-40. Dresser Ind. 33 39 5.1 Buy for 60-70. Eagle Picher 22- 32 4.8 Hold for 40, then 60. Fansteel 2224 27 3.7 Buy for 49. Flintkote 27-30 43 5.8 Hold for 50, then 70. Garrett Corp. 30 41 3.9 Hold for 50-55. General Mills 69 69 3.6 Buy for 90-105. Great North.Rwy. 30 38 3.3 Hold for 47. Greer Hydraulics 12 18 2.2 Hold for breakout 16-19 area. Hall Printing 16-17 20 7.0 Hold for income. Hercules Motors 16- 19 4.2 Speculative buy. Hershey Chocolate 42 4.8 Buy for patrent holding. Hewitt Robins 25-30 35 5.7 Hold for 50-60. Hooker Elec.Chem. 26 31 2.5 Hold for 40. Idaho Power 45 55 4.1 Hold for 68.Buy at 50. Industrial Rayon 45 53 5.6 Hold for 58-63. Inter. Tel & Tel 18 25 4.0 Hold for 31. Jaeger Machine 27 28 7.0 Buy for 34, then 42. Joy Mfg. 47 45 5.6 Buy for 75-rOO. Lees (Jas.T.) 25 30 6.6 Hold for 35-37. Lehman Corp. 40 47 2.1 Hold for growth. Lion Oil 35' 47 4.1 Hold for growth. Lowenstein 14-15 25 4.4 Hold for 30. Merck & Co. 20 23 3.4 Buy for 34. MiRMion Corp. 38 38 Buy for 57-62. M-K-T, pfd. 55 85 7.0 Hold for 90-100. Monsanto Chern. 93 105 2.4 Hold for 125-140. Montana-Dakota Util.26 30 3.3 Buy for 45-60. Montgomery Ward 60-65 82 5.8 Hold for 90-100. Mullins Mfg. 23 24 6.2 Buy for 34-38. N.Y. Air Brake 24 6.2 Hold for 29-34. N. Y. Central 20-21 34 2.9 Hold for 4L47. Northetn F'acific 59 69 4.9 Buy for 95-105. Otis Elevator 39 63 4.8 Hold for long term 80-90. Pan-hmer.Rir. 11-13 18 4.4 Buy for 21-23, then 30-35. Paramount 23 39 5.1 Hold for 41-48. Parke-Davis 32-35 36 3.9 Buy for slow 50-52. Fenick & Ford 46' 52 4.8 Hold for 63-72. Pennsylvania Salt Ffizer & Co. 28-32 48 39 3.9 3.5 Buy Hold f or for 5595-6-650. . Pullman Corp. 51 70 5.7 Hold for 85. Raybestos-Man. 42 48 6.3 Buy for long term 80-90. Raytheon 10-12 20 Hold for long term 30-35. Robertshaw-Fulton 21 31 4.8 Hold for 40-45. St.Joseph Lead 40 46 4.4 Hold for 51-56. Shamrock Oil 17-18 42 5.6 Hold for 44-50. Simmons Co. 36 44 5.7 Hold for long term 70-80. Sinclair Oil 46 52 5.0 Buy for 68-70. Sylvania Elec. 35 44 4.5 Hold for long term 75-80. Tungsol Elec. 28 27 4.7 Buy for 39. UUUUnnnniiiiootteenndd COFMai lrrebur.ii&dt e Mfg. 64419357–5500 85522137 4345….2880 BHHHuoooylllddd fofffooor rrr lo2lloon9nng. ggtettreemrrmm77g05r. o-w80th. . United Shoe Mach. Vanadium Corp. WVvVliieascrskrtteoiennrrgnFCCJeh..oeturmrtoopi.lcS.aul p.'I Wvvlleeesssttteeerrrnnn MUFnaaircoynilfa Yale &Towne ni cd !1 'I 'I 5109-20 65-u7 5512508055—'262805 45 33749984 8557319298 57 3245….1715 5334-….1824 3.5 BHHHuoooylllddd fofffooor rrr lo41lon40ng0-g4. t8et.remrm8458. -52. HHHHHooooolllllddddd fffffooooorrrrr 4lliUnoo2cnn8-ogg4.m6tt.eee.rrmm . 70-75. – Hold for long term 80-90. ChiTc.hGe r.iWsseusets (3el8tJm,Cinhaitce.dR.aIr.e(92J, Colum(2b6ia),BGaesll (1&7H),oDweeclcla (8(13)5JC,Daelnifv.ePracRkio. G(2ra7n)d, e l12),DeVilbisS (23),Fruehauf (38),Gray Mfg.(15),Gulf Mobile (38),Interchemical 39),Johns Man.(B5),Kennecott (108),Masonite (29),Minn.Er.& Lt.(24 Montana Pro i jS3te8e)1 QweQs Ill.Gl'qI .(s7;); , (108),J.FPls\,M3dUj,lSs td.,ack.\28j, EDIvMUUSNTDONW. T&ACBOEL. L Radio (4(72)0,R. epublic