Tabell’s Market Letter – June 29, 1962

– fiLE copy—– —. –,—- ———. Walston &- Co. Inc.——— Members New York Stock Exchange NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHJCAGO OFFICES COAST TO COAST AND OVERSEAS ,, TABELL'S MARKET LETTER June 29th, 1962 en July 15th, 1960, when the Dow-Jones Industrial Average was selling around 630, this letter made a long-range forecast. We said, Believe that the market needs a lengthy consolida ting period. Ey lengthy, we mean a period of several years. In terms of the Industrial Average, it is entirely possible that the 700-750 area will be the upper limit. and the 550-500 level will be the lower limit. ever the next three to five years, the market may traverse this whole range several times. Tow, two years later, we see no reason to change the forecast. The average reached ,the upper limit oC the,.r;ing,ein ',TovembeL1961 at '- — the lower limit of the range at this week's low of 524.55 at a pace a bit more rapid than we expected. In our opinion, the market is in a buying area in the lower limit of the long term range. The next important move will be toward the upper limits. We continue to believe that the average will hold in a wide trading range for some time to come but, contrary to general opinion, the volume of trading will be heavy. Listen below are a number of special situations that appear attractive at current levels. Armstrong Rubber (33) is a replacement-tire company with 67 of sales to Sears, Roebuck. Sears owns 12 of Armstrong stock. A major plant expansion in California should result in increased profits. The 1962 high was 47. Beaunit lVIills (23) is selling under ten times earnings and yields 50/0. Develop- ment of new rayon and chemical fibers and expansion of fabric output reduces depend- ence on rayon tire cord. Cluett, eabody's (38) expanding operations in Arrow furnishings and entrance into the retail field plus the potentials of Clupak, the extensiblePer,offerintereSting possibilities. Stock is selling at about twelve times and sold &.tas high as 52 earlier this year. Collins & Aikman (25) earned in the Ma e a record. The com- . pany has broadened its product line and 600/0Of recent sales were In products anticipated. Diamond National (43) \). arnings of over 3. 00 are now derives 700/0 of sales from packaging products with mat e for most of the remainder. Aggressive new ma g 0 r lt in continued growth in sales and earnings. .2;lectric S ould be helped by high replacement battery volume n us batteries. Earnings should approach 4.00 a share. Re8earch activities 1 el cell field have promising longer range potentials. Stock reached a high of 7 960. International Minerals & Chemical. (38) Completion of the large potash mine and plant in Saskatchewan should contribute appreciably to sales and earnings in 1963 and in later years. Selling at fourteen times earnings and yielding over 4, the stock has considerable attraction for capital appreciation. The 1962 high was 57. Kerr Mc8ee (26) is a fully-integrated oil company with increasing natural gas interests. In addition to contract drilling, it has important interests in uranium. Contracts with A.d.C extend through 1966. Also has interests in helium and potash de- velopments. arnings for fiscal year ending June 30th are estimated at 2.60-2.70 a share with substantial improvement over this level expected for 1962-3. J. Ray McDermott (22) conductscthe largest marine oil field construction bus- iness in the Gulf Coast area and has extended operations to foreign countries. Also explores and develops oil and natural gas properties. Earnings for the twelve months ending March, 1962 equalled 2.78. The stock appears undervalued. North American Aviation (57) is a leading contractor of modern weapons and space systems. It is, in our opinion, the most attractive aerospace issue. It is available at 13. 3 times earnings of 4.30 a share, estimated for 1962. J. Stevens (31) is one of the more important manufacturers of textiles. Ex- pansion and diversification have enlarged the sales and earnings base and at present levels, the stock is selling at 8.3 times estimated earnings of 3.70 for 1962 to yield 4.80/0. Book value on Cctober 31st, 1961 was 56.44 a share. In our opinion, the stock has an outstanding capital gains potential. TlPtAmd.J,lndeTIfJ'l!qtTCJIOtnnccs IS to be construed as, nn offer to sell or a sohcltatlOn to or completeness and the furnishing thereof IS not, II.nd under tlPbe -.41.2n by WAlston & k … U1UJ'Wiiradones All l;\fiwsi9lp. of opinion arc subJect to chanltC wLthout notice Walston & aid.Op.ytNte an mtel'elt In the' securitIes mentioned herem. This mll.rket letfilV.M..ihladbLaili mformll.l on day to day ffill.rket news II.nd not as II. complete analysls AddltlOnal mformation '\\,Ith respect to any SeC1LrltiCS referrc furmehcd upon r e q u e s t ' !thlll,(ormll.tlOn and to herem '\\,ilJ be \\'N J01