Account gamble
Try New Zealand
John Bull
The market in its present condition is fraught with dangers I wonder how many are nursing burnt fingers following the latest collapse? Fortunately, my recommendation of Ferro Metal did not fall in the category of general disasters and. Ladies Pride has shown a fair degree of strength since I mentioned them last week. And the prospective PE ratio is still only 7.7.
Many of the faint-hearted, will no doubt steer well clear of the market. However, there are situations that will continue to attract buyers. And in this climate one of the safest areas of investment is considered to be overseas. This is why my attention is drawn to NMA Wright Stephenson whose halfyear results will be announced early this month.
The company as it now stands is the product of a merger last year of NMA and Wright Stephenson. With the activities of the two companies in the pastoral field as well as providing banking facilities for farmers, retail and wholesale trading, and motor distribution, NMA Wright Stephenson is virtually a microcosm of the New Zealand economy.
As we all know to our cost, food prices have rocketed and there has also been a dramatic increase in the price of wool. Now these facts will transform NMA Wright Stephenson's profits this year even though the group does not expect the full benefits of the merger to work through immediately.
The group will also achieve a significant amount of capital gain from the sale of surplus premises and a reduction of merchandise stock, following the merger.
It is very hard to make a guesstimate of profits this year. However, it is certain that the 1972 result, showing pre-tax profits of $8.6 million, will be easily beaten. At 89p, on a PE ratio of 11.8 and yielding 4.3 per cent, the shares should prove a good gamble.
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