Common Stocks and Uncommon Profits and Other Writings

part of this is attributable to above-average expenditures on research. 
More significantly, steps have been taken which are beginning to show 
indications of important improvement in this factor. Management has 
demonstrated considerable ingenuity under a dynamic president, and 
in recent years has been increasing importantly in depth. Mallory
shares enjoyed about a five-fold increase in value during the ten-year 
period of 1946 to 1956, frequently selling around fifteen times current 
earnings. 
“Perhaps investment-wise one of the most important factors about 
Mallory lies not within the company itself but in its anticipated one-
third interest in the Mallory-Sharon Metals Corporation. This company 

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Five More Don’ts for Investors
1 3 9 
is being planned as a combination of the Mallory-Sharon Titanium 
Corporation—half of which is owned by P. R. Mallory & Co., and 
which has already proved to be an interesting venture for Mallory—and 
National Distillers’ operations in the raw-material stages of the same
industry. This new company gives indication of being one of the 
lowest-cost integrated titanium producers and as such should play a 
major role in the probable growth of this young industry. Meanwhile
the corporation in 1958 is expected to start its first commercially sig- 
nificant zirconium product and has within its organization considerable 
know-how in other commercially new “wonder metals” such as tanta- 
lum and columbium. This partially owned company gives indications of 
becoming a world leader in not one but a series of metals that promise 
to play a growing part in the atomic, chemical, and guided-missile age
of tomorrow. As such it could be an asset of tremendous dollar signifi-
cance to increase the growth that appears inherent in Mallory itself.”
If I were writing these words today, slightly over two years later, I 
would write them somewhat differently. I would tone down moderate- 
ly my enthusiasm for the possible contributions of the one-third owned 
Mallory-Sharon Metals Corporation. I think everything I said two years 
ago could still occur. However, particularly so far as titanium is con-
cerned, I believe it may take longer to find and develop sizable markets 
for this metal than had seemed to be the case two years ago. 
On the other hand, I would be inclined to strengthen my words for 
the Mallory company itself by about the degree I would weaken them 
for its affiliate. The trend I mentioned of increasing management in 
depth has progressed importantly during this period. While Mallory, as 
a component supplier to the durable goods industry, is in a line of busi-
ness that is bound to feel the ravages of any major general slide, the 
management showed unusual adroitness in adjusting to 1958 conditions 
and held earnings to $1.89 per share against the all-time peak of $2.06
the year before. Earnings came back fast in 1959 and promise to make 
new records for the full year somewhere around $2.75 per share. Fur- 
thermore these earnings are being established in the face of decreasing 
but still heavy costs for certain of the newer divisions. This showing
gives promise that if general economic conditions remain reasonably 
prosperous, significant further growth in profits will be seen in 1960. 
Mallory stock is one of the few examples cited in this book that to 
date has done worse rather than better than the market as a whole.

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