Investment Notes
By CUSTOS
THE wonderful forecast by Professor Paish of rising company profits and dividends over the next five years—see the Banker and the current Westminster Bank Review—turns out to be a very modest-sized carrot. It will apparently not be until 1965 that company earnings in real terms will surpass the 1960 level and over the decade 1960-70 the rise will be 20 per cent, as compared with 19 per cent. in the previous decade. The average annual rise in dividends in real terms is, however, expected to be not 2 per cent. but 6 per cent, in the next five years. Inves- tors will not get fat on this theory, especially if the Prime Minister and the new Chancellor carry out their threats against company profits, but it is something to look forward to growth, however modest. A more significant statistic is that pub- lished by the Central Statistical Office for the seasonally adjusted profits earned by all com- panies in the UK in the first quarter of the year. It was up from £790 million to £850 million. The officials say that 'the decline in profits probably stopped early in 1962.' So by and large the worst may have been seen. 'In a number of ways,' said Professor Paish, 'the present economic position of the UK justifies more optimism than at any time since the end of the war.' Few would believe him.
More Recovery Shares
Last week I gave the boiler industry as a field for potential recovery shares. This week I pick out the following from a broker's cir- cular on depressed shares. First, BRITISH INSU- LATED CALLENDERS CABLES. The cable industry, it says, is now largely past its troubles and the outlook for this company is for a rising trend of profits. ALBERT E. REED, described as the largest paper-based packing company in Europe, has recently presented a report which was better than the market expected. LAPORTE INDUSTRIES, also one of my recent recommendations, recently made a reassuring report and this broker be- lieves that the chemical industry may now be at the start of an upward cycle. (Then why not buy the shares of ICI at 50s. 6d. to yield 5.4 per cent.?)
Times DN. Div. Covered Yield 131 % 2.0 4.7% 1012 1.1 5.3% 16% 1.4 7.6%
I would still add ICI.
High 1962 66/3 Laporte ... 20/9 A. E. Reed ... 45/- Low Present 1962 Price 51)9 57/- 16/3 19/9 35/- 42/-
Retail Trade Shares
In the more defensive class of retail trade this broker goes on to pick out MARKS AND SPENCER, which is still opening new stores and maintaining its growth, w. H. swum, which is undergoing an extensive reorganisation and has presented an excellent report, and RECKITT AND COLMAN, whose sales rose 10 per cent. last year (60 per cent. being overseas).
Low Present Times Di?.
1962 Price DIY. Covered Vey 7916 80)6 471 % 1,5 2.90
62/6 751- 13% 2.0 3.4.. 63/- 651- 12% 2.2 33 .4 Marks and Spencer felt 20 top and Reckitts nearly 30
High 1962 Marks & Spencer 100/6 W. H. Smith ... 113/- Reckitt-Colman 89/6
It will be seen that per cent. from its per cent.
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