Rambling Along

The stock market last week seemed to have only two gears--low and reverse. As a result it made a lot of commotion but little progress, opening the week at 671.77 on the Dow-Jones industrial index and closing at 672.52. But speeding along in overdrive was American Motors Corp. All week long, AMC stock was on the Big Board's "most active" list; in all, 687,500 AMC shares changed hands, pushing the price 1 3/8 points to 20 1/4.

One reason for the popularity of AMC stock was its compact price. Even at last week's high, American Motors sold for less than half the cheapest of the Big Three stocks; yet its 10-to-1 price-earnings ratio was as good or better than the bigger automakers could boast. Another attraction to investors was the fact that AMC is one of the few big U.S. industrial corporations with no long-term debt to worry about; since its brush with bankruptcy in the early 1950s, the company has totally paid off its once crushing burden of debt, and such expansion as it is currently planning will be financed out of retained earnings.

To big (235 lbs.), cigar-chomping President Roy Abernethy, 56, who took over American Motors last February when George Romney stepped out to seek and win the Governorship of Michigan,* the big play in his company's stock seemed long overdue. Says Abernethy: "For the past three or four years, there have always been a number of doubting Thomases, but each year we've proved that we can play ball in the big leagues." There is no doubt that AMC is in the big league now. Its sales for the first ten days of January were 38% higher than a year ago. So enthusiastic has been public acceptance of the restyled 1963 Classics and Ambassadors that Abernethy predicts the company will sell 550,000 cars in 1963, an increase of more than 25% over last year. But even if American Motors does not do better in 1963 than in 1962, no one is apt to complain very loudly: reporting last week on the final three months of 1962, AMC announced that its profits for the quarter had jumped 32%, to $12 million, and that sales ($315 million) were the highest for any quarter in the company's history.

* A move that cut Romney off from a tidy windfall. To avoid conflict-of-interest charges, the new Michigan Governor formally resigned all connection with AMC last Nov. 15, nine days after the election. Had he stayed with the company nine days more he could have taken up options on 13,494 shares of American Motors at $9.91 a share. This would have enabled him to buy for $134,000 stock that last week was worth twice that much.

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