COMPANY NOTES
By CUSTOS
THE technical recovery on the Stock Exchange has been carried farther than most people expected. There have been a few good company reports to help the buying and some investors no doubt believe that the bottom has been seen in the industrial share markets. The SHELL interim dividend of 5 per cent. tax free (the same) on the 25 per cent. larger capital spurred the recovery in oil shares. The quarterly report showed that profit margins had recovered and for the nine months total net profits were more than 16 per cent. up. The final quarter will show the effects of the Suez squeeze but the directors state that the increase in costs will be recovered in selling prices 'to the greatest extent pos- sible.' We motorists well believe it. At the present price of 145s. 9d. Shell give a gross yield of about 3+ per cent., which is not exciting. BURMAH at 84s. 3d. give 4.2 per cent. Oil shares are tending to 'sell off' after their sharp recovery, which is not surprising.
*
The steel reports brought some buying of steel shares, but in view of the re- nationalisation threat there was not much follow-through. The profits of UNITED STEEL were down by about 6 per cent., but its dividend was maintained at 12+ per cent. and covered by earnings of over 80 per cent. Next year it will receive the benefit of its new plant extensions. At 34s. 9d. to yield 7.2 per cent. the shares would appear cheap if they had not been denationalised at 25s. SOUTH DURHAM at 25s. 9d. to yield
6.15 per cent. is still selling below its denationalisation price of 27s. 6d. More- over, its profits were 10 per cent. up and covered the 8 per cent. dividend over four times. It had the benefit of a full year's operation of a new pipe plant and as it pro- duces steel pipe for the oil industry it can expect a keen demand for its products.
'"
The spur which the oil crisis has given to the development of nuclear power has brought investors back into the market for the three big electrical-power groups and some sharp rises have been seen. If any investor feels that the industrial share market may have touched bottom but is not quite certain, he will gamble less if he buys this group rather than motors of other industrials. Some respectable yields can still be obtained on a few. For example. the new GEC have risen to 26s. (20s'. call pending) and yield 6 per cent. if the 4 per cent. dividend is maintained on the in- creased capital. ENGLISH ELECTRIC are LW to 47s. 6d. and give Si per cent. on the 12+ per cent. dividend covered 2.7 times. AEI have jumped to 67s. 6d. and yield 4.4 per cent. on 15 per cent. covered 3.6 times. Tower' shares proper generally yield under 4 per cent. I have been watch- ing for some time HEAD WRIGHTSON, which supplies essential equipment for all our basic industries and can build nuclear power stations on its own except for the electrical gear. These shares recently touched 100s. to yield 4 per cent. on the 20 per cent. dividend covered 31 times. This week, however, they have gone over 110s. They should be bought on any reaction.
Previous page
