Investment Notes
By CUSTOS
EQuiff shares in the free world markets dare moving in a contradictory fashion. In America the Johnson bull market is firmly under way and is attracting funds from other countries, including the UK. In France shares are going down and in Italy slumping. Inflation trouble is worrying both these countries and in Italy there has been a flight from the lire, prompted by the sharp rise in wages and a threatening balance of payments deficit. In Holland shares are holding their own and in Germany rising in deference to the current export boom. In the UK share activity is drying up as we approach the Budget and a general election, but new issues are being speeded up for the same reason. Good com- pany reports are keeping the 'undertone' firm. Here are two examples- RANK ORGANISATION and P. a. cow.
Rank Organisation
The RANK ORGANISATION half-yearly results were as brilliant as we all expected, the pre- tax profits being up 44 per cent and after tax 511 per cent. A one-for-one scrip issue is pro- posed. Earnings arc now running at the rate of nearly 105 per cent (after investment allow- ances) against 74 per cent in 1963-64. The upsurge in Rank-Xerox profits has only just begun and although cinema profits are still nearly 50 per cent of the total, Rank-Xerox, plus the bowling alleys, etc., should have a significant effect upon future earnings. The 'A' shares have risen to 68s. to give a yield of 21 per cent on dividends.
P. B. Cow The year's results for P. 11. cow, manufacturers of rubber and plastic products (including the Li-lo inflationary air beds), hot-water bottles, etc., were much better than expected. The pre- tax profits have risen by over 70 per cent and the dividend has been raised from 151 per cent to 20 per cent, covered 1.7 times by current earnings. A one-for-three scrip bonus is pro- posed. The motor industry still takes about 20 per cent of the group's output and the motor boom was probably responsible for the sharp upturn in profits. The directors forecast a divi- dend of no less than 15 per cent on the larger capital. The 4s. shares at 12s. 9d. to yield 6.4 per cent, may be considered attractively priced. They are a useful addition for income purposes to the portfolio.
De La Rue Should these shares he bought or sold? I have been reading a brokers' circular which is en- thusiastically in favour of a purchase. The company is divided into widely different sec- tions—Formica (plastics), where they believe the tide is now turning, bank-note printing, where the trend is upwards and the prospects in the US encouraging, Potterton gas boilers, where
sales are steadily increasing, and, finally, Bull Machines, the leading European producer of computers, which has formed a joint company with DE LA RUE for the UK agency. These brokers consider that the potential earnings of the company's current investment projects justify a price of 55s. for the shares, excluding profits from De La Rue Bull. At the present price of 38s., the shares yield 31 per cent on dividends and 5; per cent on current earnings.
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