IN VESTMENT NOTES
By CUSTOS
rinHE Stock Exchange has been moving up I again in a fairly heavy volume of trading and even the gilt-edged market recovered a little from the shock of the LCC 5 per cent. loan which went to a discount of I ea per cent. on its issue price of 951, Industrial equity shares have been very firm and sound investment stocks like GALLAHER have been bought for their income yield. The trading profits of Gallaher for the year ending December were nearly 20 per cent. up and the net profits were nearly 40 per cent. higher. At 46s. to yield 5.4 per cent. this equity is a useful addition to any investment portfolio. Another share which can still be bought for income and capital security is LIEBIGS, which at 94s. returns 5.05 per cent. on the anticipated dividend of 24 per cent. covered 3.4 times. These are safer pur- chases than many popular shares on a 21 per cent. to 31 per cent. yield basis.
United Drapery
Store shares remain a firm market, being the main beneficiaries of the Budget, and this week's report of UNITED DRAPERY for the year ended January last justifies market confidence in this group. Trading profits have increased by 10 'per cent. and the net profit attributable to the holding company by nearly 20 per cent. The dividend is raised from 324 per cent. to 35 per cent. and a 'rights' issue is announced of one in ten at 20s. The market expects the dividend rate of 35 per cent. to be at least maintained for 1959-60 and the prospective yield basis ex rights for the shares, which are 39s. as I write, is around 43 per cent. Compared with 2.65 per cent. on Marks and Spencer this is an attractive yield for this well-managed company.
Motor Components
The motor component makers are sharing to the full in the motor boom. PRESSED STEEL, the biggest manufacturer of steel motor bodies in the country, increased its gross profits for the year to December by 74 per cent. and its net profits by 32 per cent. The equity dividend has been raised by 5 per cent. to 25 per cent. and as this is now covered 21 times by earnings the 5s. shares at 26s, to yield 4.8 per cent. are a reasonably priced investment. The company is not entirely depen- dent on the motor industry, for it manufactures also a wide range of refrigerating equipment. By contrast with such a highly specialised and efficient company as Pressed Steel, the trading results of another component manufacturer, BIRFIELD, have been disappointing, for they have not yet justified the large capital expenditures undertaken. For the Year ending July difficulties have been encountered but for the last quarter beginning next month some inlprovement is expected. Demand is growing and there is surplus capacity waiting. The shares have come hack to 48s. 6d. to yield 6.1 per cent. on the 15 Per cent. dividend last covered 2.9 times. Per- haps the worst has now been discounted but share- holders must have more patience than I had thought necessary some time ago. I confess to having been disappointed over this 'share. SERCK is another story. It still manufactures motor-car radiators and maintains a repair service, but it has expanded its business into heat-transfer equip- nient and coolers for the engineering, shipping and oil-refining industries. Serck is. a leader in its special lines and has subsidiary interests on the Continent and in South Africa. For the' year to last July it earned nearly 50 per cent. and paid 13 per cent. At 19s. 9d. the 5s. shares yield only per cent., but before long the company should repeat its scrip bonus of 1957 and the yield will be increased.
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