INVESTMENT NOTES
By CUSTOS
FROM the state of Stock Exchange activity no one would imagine that a general election is to be held in a few weeks. Speculative invest- ment, option dealings, new issues, placings, take- over bids-the whole circus goes merrily on and although 'prices eased at the end of the account on Tuesday the 'undertone' remained very firm. A tremendous option business has been done in steel shares, but if my colleague is right it is not so necessary to throw' money away on options. The two outstanding steel shares which appeal to American and British investors alike-STEEL OF WALES and UNITED STEEL-are standing, as I write, at middle prices-33s. 6d. and 41s. 6d. respectively-which are level with those ruling on September 8, the date when the date of the election was announced by Mr. Macmillan. If this is to be the datum line in the event of renationalisation by Mr. Gaitskell the shares are a safe purchase, and if the Conservatives win they should rise to 42s. 6d. and 53s. respectively to return a yield of 4+ per cent. instead of 5.9 per cent. In other words, there is a chance of a capital appreciation of the order of 27 per cent, and not much chance of a fall. There is not much doubt that the Stock Exchange will remain active-provided it remains confident of a Conservative victory.
Machine Tool Shares
The sharp rise in machine-tool orders, which are up about 20 per cent. on the corresponding months of 1958, suggests that it is now safe to extend investment buying from the consumer goods trades to certain capital goods-though I would not yet include the heavy electrical trades. Of the best-known companies I like ASQUITH 5s. shares at 17s. 3d. to yield 4.3 per cent, on the indicated 15 per cent. dividend covered twice on earnings for the year to September 30 last. A similar yield is obtainable from ALFRED 11ERBERT £1 shares at 45s. on the 6 per cent. tax-free divi- dend covered 2.3 times. The first half of this com- pany's year to October 31 was still adversely affected by the recession, but the current half-year is showing better results. CRAVEN BROTHERS (MANCHESTER) 5s. shares at 12s. return a potential 4.65 per cent. assuming that the final dividend is maintained at 61 per cent. The interim dividend for the year to December was raised from 31 per cent. to 5 per cent. This company specialises in the manufacture of non-standard machine tools of the largest sizes for all types of engineering, including even the railways, It is not unreasonable to hope that the restoration of investment allowances in
ERRATUM
Halifax Building Society. In the advertisement which appeared in the Spectator of August 28, the interest on the Paid-up Shares should have read 31% and on the Regular Savings 34%.
the Budget is at last beginning to have its stimulat- ing effect on the machine-tool industry.
Lesser Chemicals
Now that the leader in the chemical market- ICI-is only yielding 3.8 per cent., the investor is justified in looking outside this class. For example, F. W. BERK 5s. shares have advanced to 9s. 101d. to yield 4.9 per cent, on the 10 per cen dividend covered 2+ times. The interim divide in respect of the current year has been increase I have previously called attention to GRIT CHEMICALS which has a minority interest in t rapidly expanding Titan Products. The shares hat risen to 27s. 3d. to give a return of 4.6 per cell on the 25 per cent. dividend covered nearly I times. BRITISH GLUES I had also recommend, some time ago as being a likely starter for a tat over by MONSANTO, but although I was disc pointed on that occasion I hear that it is still possibility. The 4s. shares have just recovered' 24s. 9d. to yield 31 per cent. on the 221 per ce dividend covered twice-not because of any tat' over but because the company has developed new process for the extraction of protein fro vegetable materials (including grass) with efficiency of about 95 per cent. Only 4 per cell of this tasteless protein need be added to flour l provide the normal human need for proteins food. The extraction plant is simple to opera' and is therefore suitable for use in the uncle developed countries where protein needs a greatest. By-products of the process should help'. make it a commercial proposition.
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