Tabell’s Market Letter – June 14, 1974

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE. INC MEMBER A.MERICAN STOCK eXCHANGE June 14, 1974 -.- A-whlle-ago7'wh'en 's-mrre'-wag'1lubbed- growth' stocks ;which-w-ere stlllat'their'peakof-institution 'popu —- larity, I1Vestal Virgins. II we formulated a group of stocks of our own, which we named Sexless Spinsters. These were, by and large, basic-industry, commodity-oriented companies, which had historically been viewed by the market as cyclical in nature and which generally were selling at PIE ratios of one-third to one-half those of the growth favorites. The following table shows the approximate prices of each group, 13 virgins and 11 spinsters at five pOints in recent market history, the January 1973 high, October 1973 high, December 1973 low, April-May low, and a recent price. The percentage change between pOints is also shown together with the average for each group and the Dow-Jones Industrial Average. Jan Oct Dec Apr-Mar High High Change Low Change Low Change Recent Change DnA Hli7.2l 99759 – 6.5 783.56 -21.4 788.80 0.6 853.25 8.2 Avon Products 132 98 -25.7 58 -40.8 40 -31.0 52 30.0 Burroughs 115 121 5.2 92 -23.9 96 4.3 110 16.6 Coca-Cola 145 145 115 -20.6 98 -14.7 118 20.4 Disney 115 82 -28.6 41 -50.0 41 49 19.5 Eastman Kodak 145 135 – 6.9 108 -22.9 100 – 3.8 116 16.0 IBM 360 280 -22.2 235 -16.0 210 -10.6 226 7.6 Int'l Flavors/Fragrances 48 47 – 2.0 34 -27.6 32 – 5.8 37 15.6 Johnson & Johnson 132 125 – 5.3 100 -20.0 105 5.0 118 12.4 McDonald's Corp 78 74 – 5.1 44 -40.5 50 13.6 62 24.0 Polaroid 130 125 – 3.8 65 -52.0 53 -18.4 42 -20.7 .P-fecter&Gamble 1.20-..1-.06dL69…….,..l6 ..0.-…85 .5105'''''''',.t23.5 Sears, Roebuck & Co. 124 100 -19.3 78 -22.0 80 2.5 89 11.2 Xerox 156 150 – 3.8 115 -23.3 106 – 7.8 124 16.9 Average 9.9 -28.8 – 5.5 14.8 Alcan Aluminium Ltd 26 40 53.8 36 -10,0 27 -25.0 29 7.4 Allied Chemica1 28 48 71.4 43 -10.4 39 – 9. 3 41 5, 1 Alcoa Bethlehem Steel Int'l Paper Kennecott Copper Monsanto Phelps Dodge U. S. Steel 40 54 30 36 42 57 26 38 55 74 44 50 34 37 35.0 20.0 35.7 46.1 34.5 13.6 8.8 44 27 43 31 43 39 30 -18.5 -25.0 -24,5 -18. 4 -41.8 -22.0 -18.9 43 29 42 31 60 35 40 – 2.2 43 7.4 31 6.8 – 2.4 48 14.2 36 16.1 39.5 68 13.3 -10.2 37 5.7 33.3 45 12.5 Westvaco 28 40 42.8 27 -32.5 27 27 Weyerhaeuser 28 41 46.4 34 -17.0 40 17.6 40 Average 37.1 -21.7 4.4 7.4 The figures, we think, are interesting. While the Dow was posting a 6.5 decline In the first nine months of 1973, the cyclical issues advanced an average of 37, versus a 9.9 decline for the growth issues. Although not invulnerable to the October-December decline, the cyclicals performed about the same as the Dow on the downside and considerably bettered the average 28.8 decline shown by the growth issues. This performance continued for the first four months of 1974 with the cyclicals showing a slight advance to the April-Mayolow., whereas the growth issues as a group continued to move lower. It is only on the recent rally that a chi.nge has become apparent 0 thts advance. the growthlssueshave posted an average 14.8 advance, exactly twice the advance shown by the cyclicals, which, for the first time, have failed to outperform the Dow. We think there are a number of conclusions to be drawn from the table, the most important of which is that the better performance of the growth stocks is a relatively new phenomenon, only six weeks old now, whereas, to date, at least, the spinsters have proved their staying power. Nine of the eleven cyclical issues, for example, are above where they were at their January, 1973 high despIte the fact that the Dow is some 200 pOints lower. Every one of the growth issues remains today below that high and in some cases the difference approaches being staggering. In short, we think it is premature to conclude that the super- ior growth stock performance which characterized 1971 and 1972 and then disappeared abruptly in 1973, is about to burst out again in its old refulgence. Dow-Jones Industrials (1200 p. m.) 844.81 S & P Compo (1200 p. m.) 91. 56 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (6/13/74) 535.06 AWT/jb No statement or el(preSSlon of Opinion or ony other metter herein tontomed IS, or IS to be deemed to be, directly or Indirectly, on offer or the solicotlon of on offer to buy or stili any seC1.Hlty referred to or mentioned The molter IS presented merely for the conve(l,en of the subSCriber While e believe Ihe sources of our Informo tlon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herelO Any action to be taen by Ihe subSCriber should be based on hl5 own investIgation and IOformohon Janney Montgomery Scali, Inc, os 0 corpOlOhon, and Its officers or employees, moy now hove, or may later toke, poslllOns or trades In respect to any securities me'llioned 10 Ihls or ony future Issue, and such position may be different from any views now or herelfter expressed In thiS or any other Issue. Janney Montgomery Scott, Inc, whICh IS registered With the SEC as on Investment adVisor, may give adVICe to Its Investment adVisory and othel customers Independently of any statements mode In thiS or In any olher Issue Further ,nformat,on on any security mentioned herein IS available on request