Tabell’s Market Letter – December 11, 1959

\ fiLE COpy Walston &Co. – – – – – Inc – – – Mem bers New Y O1'k Stock Exciw.nge NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER December 11, 1959 Action of both the Industrials and Rails continues constructive, despite profit- taking which crept into the market on Friday. As previously noted, the upside objective on the Dow-Jones Industrials is 705 -710 and the Rails appear to be slowly basing out. FERRO CORPORATION, INC. Current Price Current Dividend ,– 44 1. 60 3. – In almost any area of the United States, newly constructed office and industriaCouildirigs dot-the urban ana rural Long Term Debt Common Stock 5,962,641 748,627 shs. scenes. To any observer of this con- struction, the growing use of brightly colored porcelain enamel -pm !s, both Sales – 1959-E 63,000,000 as curtain walls and interior decoration Sales – 1958 56,380,000 must be apparent. Porcelain also con- Earn. per share 1959-E 4.30 – 4.50 Earn. per share 1958 2.76 tinues to be used in the home, not only as part of the house itself, but also as a coating for appliances. All porcelain, Market Range 1959-1951 45 5/8 – 16 wherever used, has one thing in common- the raw material used in coating the metal base. This material is called frit, and the country's largest producer of enamel frit is Ferro Corporation, Inc. Ferro produces not only porcelain frit itself, but also offers an engineering ser- vice selling the furnaces and various machines used in It is also the seller of non-organic pigments used to color 0 ti IWhes products are sold both in this country and abroad, with about coming from wholly-owned foreign subsidiaries. 1\ V;) t e c any's total sales – and relateci-products-are- – howeve-r. It is an important producer of fibre, a 0 ct .ch is now reaping record sales production, and, in addition, business and other engineering lines. With the gro i F ro s products, sales and earnings have expanded sharply in 1959. ae y reported 3.52 earned per common share for the first nine months 9 . . 5 for the same period in 1958. For the full year 1959 an considerably better than 3 million after taxes, roughly in the range of 4.30 t .50 per common share. This is expected to be achieved on sales of some 63 million indicating a pre-tax profit of close to, or better than 100/0 of sales, Significantly, this will be the best such margin in Ferro's recent history. For 1960 and beyond, the outlook is even more impressive. Sales should expand sharply as industrial construction continues to grow. Appliance companies, one of Ferro' major categories of customers, should have a banner year in 1960. Ferro's capital goods divisions, which contributed little or nothing to profits in 1959, should be on a profitable basis as capital spending increases. Thus, per share earnings for 1960 could well reach the 5.50 level. Over the long term, the growth in the use of porcelain enamel should continue. Ferro's entrenched position in Europe places it in a favorable position .in repectto sales in the European common market.Fibre gluss continues in short supply, and continued expansion of this product is foreseen. In the research field, Ferro has been working for a number of years on lowering temperatures required to bake enamel. This research is tremendously important since as this temperature is lowered, new material such as narrow gauge steel, and aluminum can be porcelainized thus widening tremendously Ferro's potential market. Despite the favorable near term and long term outlook, current prices mark Ferro at only ten times estimated 1959 earnings and eight times possible 1960 The recently raised 1.60 dividend provides a 3.6 yield and could be further liberalized. From a technical point of view, the stock has a long term upside objective of 73 with strong support at 38-35 just under current levels. It is being added to our recom- mended list for purchase in capital gains accounts. n r BBfvRJUB W.'PyrDELLTA under4.lld M-.lRflMnnces IS to be construed aB, an offer to sell or a Sc9t1)1t11f1.tronc.tfl'lltlOl.llllY to herein The mformnlion It!,funVrU''l1ltlIil.\I;I.t fIf or oompJeteneslI and the thereof I nN he' eonstruM a9 n repr(!Senta opinion are to change Without notice Walston & Co, Inc, and Offlcerll, Directors. Sto'ckholders and C'l'S thereof. purchase. sell and may ha,e an Interest m the securities mentlOTIe herem This market letter IS Intended and presented merely as a general. lri'ii. i'I'Reemllry on day to dny n1llrket news nnl not as a comDlete analysts Additional mformatJon wtth n!Spect to any securities referred to herein Will be furmll ectllpon request. . \\'N 301