Tabell’s Market Letter – February 10, 1961

Walston &Co. Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHJCAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER February 10, 1961 The Dow-Jones average has held, for ten trading days, in the 640-660 range originally envisioned by this letter as an area of heavy overhead supply. The . question is now whether a consolidation will occur around these levels, or a will take place. In any case, the latter should not be much more severe than a one-thlrd retracement of the advance back to about the 630-620 area. As always, it will continue to be more important to concentrate on individual stocks which appear attractive, such as the one discussed below. –' U .- S-.' VI'AMIN & Current Price Current Dividend Current Yield 37 .60 1. 6/0 Long Term Debt Common Stock None 1,909,110 shs. Sales, 1960-E 15,000,000 Earned per Sh. -1960-E 1.10 Mkt.Range 1961-1959 52 – 24 From a technical point of view, U. S. Vitamin & Pharmaceutical Corporation has a very strong pattern. It reached a high of 52 in 1959 and reacted to an early 1960 low of 24. Since that time the stock has been bu1lding up a broad accumulation area with most of the work in the 28-36 area. The recent upside breakout indicates a rise to much higher levels over the longer term. U. S. Vitamin is a small company with only 15 million of sales in 1960. This smallness has, in addition to obvious disadvantages, a number of significant advantages for the company and for the investor interested in purchasing its stock for capital gains. The most important of these advantages is that development of the company's research staff which is able to capture an im t rlet, can, due to small total volume, have a tremendously importane;etoe n Such a develop. ment may well be DBI, an orally-administered dru a in e ent of diabetes. The market for such a drug is St ica veys suggest that approxi- ma tely-3-million-persbifs in the Uhlt-euStit h – . — dia – 8 ;!naOllar terms, tne market for oral diabetes drugs is estimated l'Q\We in ss of 30 m1llion. To date, OBI has captured only a small s e t 1 to the fact that it was introduced drug at the end of 19 0 t 'to be running at an annual rate of only 2 million, twice the 1959 fi e icant portion of the total market. Meanwhile, tars de usage of sulfa-type drugs have uncovered a number of problems which were , at first, apparent. Moreover, the main former objection to DBI, occasional rence of annoying side effects such as nausea, has now been eliminated through the use of a controlled-release tablet which releases the drug into the bloodstream in small amounts throughout the day. Thus, it appears logical to expect that OBI will gain sharply in market acceptance at the expense of former types of ,treat- ment. It is worth repeating at this point that this is a 30 million-plus market and that U.S. Vitamin's total sales in 1960 were 15 million. It is also worth noting that Vitamin's present detail staff is set up to handle a much greater sales volume so that profits on the additional increment, should be even greater than the company's overall 24.3/0 net before taxes in 1959. The other specialty drugs, which now comprise the greatest portion of U. S. Vitamin's sales, also have.interesting potentialS. These include Arlidin, used'to-in.c—- crease blood flow to the various parts of the body, C. V. P. , prescribed in various applications for capillary bleeding, and Bacid, used to counteract undesirable side effects of antibiotics. On current earnings and dividends (1.10 per share earned in 1960 current dividend rate; 60c;) U. S. Vitamin is not cheap at its price around 38. However, when the growth potential inherent in DBI and other products is taken into account, it can easily be seen that the potential earnings increase over a period of time is huge. The stock, therefore, has considerable appeal at present levels and is being added to our recom- mended list. ANTHONY W.TABELL Dow-Jones Industrials 639.67 WALSTON & CO.INC. T aimdDn.'lVIUS m A , under no to be construed tlS, an offer to sell or n to buy any secUrIties referred to The informatian l t d the furmshmg' thereof IS not and under no circumstances 19 to be construu as, a represen – contained herem IS not guaranteed as to or co!Jlp e eness an chan e Without nobce Walston & Co Inc and Officers, Directors, Stockholders and t10n by Walston & Co. Inc All expres;llons of OpInion aI'' subject rentlOned herem ThIS market IS and presented merely as n genernl. mformal thereof, purchase. comment.u.ry on day stoeldl an ay d maky mnr c ha tn ve n ews na.nIn. ,tneoret sat In sa the com analYSIS ….. AdditIOnal With respect to any sccurltles referred to heT(!in wIll be \VN JOt . —— — ——– —– – —– – – – – —–