THE bull market in industrial shares has blazed its way into fresh triumphs. The index at 212.6 as I write has now risen 27 points or nearly 15 per cent. in a month, and I would say that this pace is too hot to last. To what extent American buying has helped to reduce the market supply of shares it is impossible to guess, but it has been an important factor. That again should induce caution on the part of the British investor. Outstanding have been the shares in which Americans are interested Imperial Chemical up 2s. at 56s., Associa- ted Electrical up 5s. at 86s. 6d., Court- aulds qp 2s. 6d. at 50s. 6d. and Metal Box up 18s. at 112s. 6d. on the record results. We may hear what Mr. Butler thinks of the Stock Exchange boom in the debate on Thursday.
METAL BOX was one of my six 'blue chip selections for the new year: Its sales and investment income for the year to March was over 20 per cent. up and its net income nearly 45 per cent. up at £24 million. The percentage earned on the equity capital (increased by 10 per cent. bonus) was 704 against 474 in the previous year. The divi- dend is being raised from 15 per cent. (or the equivalent of 13 .17t per cent.) to 20 per cent. and a one-for-one free scrip bonus is thrown in. Furthermore, a 'rights' issue is to be made in ratio of two for one on terms to be announced later. At 112s. the shares yield 12.7 per cent. on earnings and 3.6 per cent. on dividends. If the coming 'rights' issue enables the public to acquire shares on yields higher than those mentioned, the opportunity is one that should be seized. coutt-rauLds is another 'growth' equity of the first class. For the year to March its trading and investment income increased by 64 per cent., and its net income by no less than 464 per cent. The dividend is being raised to 10 per cent. against the equivalent 8 per cent., and earn- ings at 364 per cent. are sufficient to cover this rate 3.7 times. It should be noted that British Nylon Spinners, the nylon subsidiary which is owned jointly with ICI, retained
in its business last year over £2.7 million, which is about 24 times the dividend paid to its parents. If these retained profits are added Courtaulds' total earnings would amount to 42 per cent., which would allow an earnings yield of over 16 per cent. at the present price of 50s. A dividend yield of 4 per cent. with this cover should be regarded as attractive.
The MARKS AND SPENCER mystery was finally cleared up by the chairman, Sir Simon Marks, at the annual general meet- ing. The revaluation of properties, which resulted in a surplus of £22.7 million being credited to the reserve accounts, was under- taken mainly to increase the borrowing powers under the existing mortgage deben- ture trust deed, which limits the total of debentures to 60 per cent. of the value of freehold and leasehold property. The direc- tors have embarked on a systematic plan of development, involving the extension and reconstruction of thirty stores, which is more than can be financed out of retained earnings. £3 million will be spent this year and no doubt an issue of debentures will eventually be made (up to £18 million will now be possible) to complete the finance. This will please the ordinary shareholders, for the profits accruing to them will rise with the extension of counter space. Last year sales increased by over £13 milion to over £107 million and, remembering that last summer was abnormally bad weather, the increase in sales this year might well show a steeper increase. As the chairman remarked, with full employment, rising wages and rising productivity the purchas- ing power of the public shopping at Marks and Spencer stores must steadily increase. 'The fertilisation of industry by science and technology' was the happy phrase he used to describe the amazing change in the national economy. At 71s. to yield under 34- per cent. on dividends and only 5.3 per cent. on earnings, Marks and Spencer shares
are not immediately attractive. They should be bought when markets have returned to ti ' more sober phase.