The Ypsilanti daily press. (Ypsilanti, Mich.) 1928-1962, 1943-09-13
BY Roger W. Babson

ready happened in these groups and
what may happen in them in the
near future can be a practical
gauge to the trend we may expect
of business and employment in
general. Let US consider a few lead.
ing industries.
Transportation
RAILROADS: These have been
the real war babies" Traffic con-
tinues at peak levels and operating
efficiency remains high. Net earn
ings, however, have probably
reached peak. Taxes are catching
up and fewer railroads have a tax
sheltered division. Wage increases
are another big uncertainty. Some
selected rail securities may stii
have a way to go but my advice is
not to oyerhang the market.
AUTOS: The major manufactur.
Ing companies may coninHe iheir
war work for some time to come.
expect. though, to shortly see the
smaller automobile companies re.
| convert to civilian needs. Automo-
bile stocks have generally per-
formed better than the-market aver.
age. Finances are strong. Long
range earnings prospects are good;
but conservative attitude Is Just
flied in this group.
AlRPG ANES: Forget the manu-
featuring companies and count on
the air transport companies. Ad-
vances in the stocks OF these COM
panies, have. however. already been
large. The industry is basically
sound but much new capital will
have to be raised. Hence, watch out
for diluted equities. The peak OF
! wartime earnings has -proba bly,
been reached.
Construction
BUILDING: BY the year-end We
shall probably see a decrease in
building of more than so per cent.
This applies mainly to heavy engi-
neering construction for war re-
auirements. Heavy construction Is
expanding abroad. but will in no
respect equal what was built in this
country. Postwar outlook for the in
dustry is excellent. There is a tre-
mendous backlog accommodating for
new housing Building material in.
vestments should be o. X.
STEEL. Steel companies are I'M
der the pressure of continued call
for more production and steadily
rising trend of operating costs. Re-
cent coal strikes have resulted in a
serious decline in tonnage. over.
time wage payments have been
costly and most companies are
reasonably priced. No conversion
problems face these companies.
MACHINERY: The cream is
OF the machine tool group. Re-
/ placement demands and export re-
! quirements will take care OF only
about so per cent Of present capac-
ity Huge amounts OF machinery
and equipment will be for sale after
the War. The postwar outlook for
the machine tool branch is very
gloomy-but for the manufacturers
of heavy machinery 1t is somewhat
better.
Consumer Products
CHEMICALS: The stocks OF
these companies are selling around
20 times earnings and show yields
of "a per cent. They are not cheap.
The industry has a high investment
rating and is good initiation
hedge. The volume OF products con-
tinues TO rise. Profit margins are
narrowing. but most companies
should be able to maintain earn
ings around present levels. Like the
steels. these companies have no
reconversion problems and growth
| prospects are better.
OILS: These are outstanding war
/ and peace leaders. In view of their
/ continued market strength, few
| companies are undervalued. Operat-
ing profits have held to high level
and the aggregate net for the in
/ dustry may be slightly higher at
/ the years end than it was in 1912.
/ Postwar prospects are very favor
able Many improvements have
been made in the marketing and
transporting Of oil. The demand for
petroleum should increase.
PAPER: The demand for paper OF
all kinds continues to be heavy.
Production facilities in the main are
/ adequate. but the continued short
age OF pulp throws monkey
| wrench into the whole setup. Earn
ings of some paper companies show
/ an improvement. Unfortunately
costs are advancing rapidly. Profits
Tor all companies in this group may
be well below last year.
Miscellaneous
Public Utilities: Operating COM
/ panies in this group have nearly
matched industrial stocks perform
ance. Electrical output has expand
/ ed enormously While the SEC. and
the holding companies have not
buried the Ratchet, they are GER
tainly beginning to tolerate each
other. This is most encouraging
from the investors point of view.
MOTION PICTURES: Stocks
representative OF this group will
undoubtedly keep up with the mar.
ket as a whole, but they are not
cheap. Expenditures have. however.
been kept down. Better motion pic
lures are being produced. With
more money in the hands OF the
public box office intake should hold
up.
FOOD This industry includes
baking. refining. dairying. meat
packing. the packaging OF foods.
etc. etc. Generally. huge volumes
are involved and small profit mar