INVESTMENT NOTES
By CUSTOS
THE rally in the equity share markets did not last long, although the Treasury's new • restrictions were not seen as any menace to the hire-purchase finance companies or to the banks. 4"' r , ,„ he television rental companies like RADIO low! as might even gain at the expense of those *Selling television sets. The three months' rental Which has to be paid in advance is about half an ■ . average 20 per cent. deposit. But the current Year's prospects were thought to be dimmed for the multiple stores, like GUS or BRITISH HOME '4 STORES, and on balance for the retail trade • generally. The next report from the stores might, therefore , represent a peak.
Brewery Shares
Brewery shares, recommended on April 8, were notably firm. This group is not touched by the Chancellor and the trend towards a higher beer msumption goes on. Individual breweries which c"file within merger scope or property 'revalua- tion areattracting special attention. 1 name two: ER BREWERY, whose report is due this week, and NORTHERN BREWERIES, which is the company used by the dynamic Canadian Mr. Taylor for the mergers he intends to carry out in this country. The market is going for a dividend of at least 30 per cent. from Chester Brewery, which would allow a yield of nearly 41- per cent. at the present price of 32s. This company's properties have not been revalued, I believe, for a quarter of a century. This may make it interesting to Northern Breweries, whose mergers are being concentrated in the north of England. At 12s. 9d. for the 5s. shares Northern Breweries return a yield of 3.8 per cent. Interest in the brewery market was stimulated by the report of Joshua Tetley's gross profits for the six months ending March which shows a rise of no less than 65 per cent. This indicates something like a boom in the beer trade. Incidentally, Joshua Tetley has in- creased its interim from 4 per cent. to 5 per cent. and if they pay 15 per cent. for the year the shares at 68s. would return a yield of about 41 per cent.
Blue Chips : (a) Consumer
In the present reactionary phase in the equity markets it should soon be possible to acquire some blue chip shares on a more reasonable yield basis. In the consumer trades I favour SCHWEPPES 5s. shares, which are now giving a return of 3.7 per cent., and if they fall to give nearly 4 per cent. they will be an excellent pur- chase. The 1959 report revealed a 50 per cent. rise in net profits although the recent acquisitions --Hartley, Chivers and Moorhouse—contributed to only part of the year's trading. The dividend was raised to 23 per cent. against the minimum 20 per cent. forecast last October and earnings were sufficient to cover this dividend nearly twice. The current year should bring higher earnings, if not a higher dividend. Since 1955 this remark- ably successful and well-managed company hat recorded a growth in earnings and dividend of around 23 per cent. per annum compound.
(b) Capital Goods
In the capital goods trades steel shares are already down to an attractive buying level. A watch should be kept for ASSOCIATED PORTLAND CEMENT shares. The 1959 report was somewhat disappointing and the current year's profits might be affected by lower profits from the export deliveries if a European trade war were to develop. The market was disappointed with the II per cent. dividend, but it was covered three times and if the shares fall below 60s.—they are now 63s. 6d.2—they will be getting to a very attractive yield basis for this 'blue chip' in the capital goods trades,
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