MOTOR SHARE ATTRACTIONS
Like home-railway stocks motor shares have moved up quite sharply during the past fortnight, but I would advise holders not to sell. Here again it is a case of recovery round the corner if the international political outlook is really im- proving. Registrations of private cars took a turn for the better last November, the December total held the improve- ment, and January brings a further jump of 10 per cent. It is common knowledge that buying in this field was inhibited last year, especially during the second half, by political fears, so that one could reasonably budget on the release of a pretty substantial banked-up demand this spring if political con- ditions permit.
The two shares which still seem to have scope on any really hopeful view of trade prospects are Austin 55. ordinaries, at 35s., and Standard 5s. ordinaries at 19s. 6d. On the basis of the last rate of dividend Austin now yield rather less than 44 per cent., but the capital of this company is very highly geared. In other words, the ordinary capital is so small a proportion of the total capital employed that a moderate rise in profits brings a sharp increase in ordinary per share earnings. I shall be surprised, in view of the large volume of special work which the Austin company has in hand, apart from its main business in the private-car trade, if the dividend for the current year ending July 31st, is not raised to 50 per cent. That would imply a yield of over 7 per cent. to a buyer at today's price. At 19s. 6d. Standard Motors yield over 51 per cent. on the last dividend, and it is confidently expected that a strong recovery in profits will be shown when the next accounts appear. These shares are rather more speculative than Austins, but should go higher over the next few months.
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