Tabell’s Market Letter – May 31, 1968

I I. W—a-l-sItnocn.&–C–o-. Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OVER 1110 OfF1CES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER May 31, STOKELY-VAN CAMP, INCORPORATED 1968 Current Price 60 My boys drink all… they want all Current Dividend 1. 00 through the game says Vince Lombardi of the Current Yield 1. 7 Green Bay Packers, in a recent ad. This is Long-Term Debt 1 Cum. Pfd. Stock Common Stock 9,343,000 764,356 shs. 2, 997,882 shs. true not only of the Packers but also the majority of other professional football teams, along with substantial segments of the National Basketball Association, National Hockey Leagu Sales-1969 -E Sales-1968-E 270,000,000 255,000,000 and Nation'al'and American Baseball Leagues, plus some sixty college football teams. The Earn. Per Sh. 1969-E Earn. Per Sh. 1968-E 3.25 2.75 product they drink is known as GATORADE, and it could turn out to be one of the most unique potables to hit the American market in Mkt. Range 1968-1967 603/4 – 195/8 quite some time. Its unusual potential, more- Fiscal year ends May 31st. Includes 7.4 million Convertible Debentures which, if converted, would increase common 9. over, creates, we think, an equally unusual investment opportunity in the common stock of its producer, Stokely-Van Camp, Inc. Gatorade was born out of extensive research carried on at the University of Florida (whose athletic teams are nicknamed the Gators) to combat thirst and dehydration, result- ing from profuse perspiration among athletes. A solution antly flavored, one of Gatorade's unique properties is its s to aBd various salts,pleasor bility to be absorbe by the body almost as quickly as it is drunk. This effects. First of all, it is effective at quickly relievi b io duces two important irst. ondly, it can be taken in copious amounts without danger of cramps f ,many professional athletes shave takenas much as a gallon and a l .f f e c e of a game. Most important, the debilitating loss'of energy produced e e p. spiration is and it is, indeed, a fact that many of the last season were known as fourth quarter teams. Despite its alre d Y athletic organizations, the surface of the poten- tial market for G een scratched. An obvious first step is the expansion of the institutional k a athletic teams, eventually broadening to the high school and junior high school e . he Armed Forces are still another potential sales target; and, of course, the most 1 ive possible market will ultimately be direct consumer sales. It is easy to see how the drink's use by professional athletes could make it appealing to all sorts of active people — perhaps with a promotional campaign similar to the one which has made Wheaties the breakfast of champions. An initial test marketing program will be commenced shortly in the Jacksonville, Florida, area, accompanied by extensive television and newspaper advertising. Of further interest is the possibility that, in addition to Stokely's non-carbonated version of the drink, Royal Crown Cola will produce a carbonated form, buying raw materials from Stokely. It should be noted also that, insofar as Stokely is concerned, Gatorade will be a relatively high- profit-margin product due in part to the company's being able to manufacture it in otherwise seasonal facilities. Despite recent strength in Stokely stock, it would appear that only a modest premium is being paid for the Gatorade potential, and the company would be intriguing as an investment entirely apart from its new product. An aggressive management has been highly successful in eliminating seasonal peaks and valleys, increasing acceptance of the Stokely label, moving into can manufacturing and turning around a hitherto-unprofitable frozen foods division. Unde this stimulus, profit margins have just shown their eighth consecutive annual increase and earnings per share have risen from in 1961 to an estimated 2.75 for the fiscal year ended just today. Comparison with other similar companies indicates that further expansion in marginsispossible. Thus, for the year to end May 31,1969, earnings could show another gain to the 3.00-3.25 range, entirely apart from any Gatorade contribution. Applying a con servative 15 multiple to these earnings would result in a price of just under 50; thus the pre- mium presently being paid for tlje potential is small. From a technical point of view the stock has a long range potential of 110 with support just under current levels. It is being added to our Recommended List for price appreciation. Dow-Jones Ind. 899.00 ANTHONY W. TABELL Dow-Jones Rails 255.65 WALSTON & CO. INC.