Company Notes
By CUSTOS
THE three-weeks account on the Stock Exchange ended firmly enough but the start of the new account on Wednesday was not nearly so confident. The immediate outlook for equity shares was clouded by the sharp set-back in Wall Street. Whether this was linked with the cut in wheat prices, to which my colleague draws attention, or whether it was just a technical correction after a long sustained rise, is a moot point, but I have lately been taking the view that our bull market is due in any case for a pause. Some shares have already come back sharply this week. CANADIAN EAGLE, for example, fell from 33s. to 29s. 6d. ex dividend. I cannot recommend these shares for the non- professional investor. The company holds the non-Mexican assets of the old Mexican Eagle, that is, it owns the Eagle Oil and Shipping tanker fleet, which carries the petroleum products (bought Lotb. and sold c.i.f.) for the jointly-owned distributing companies in South America and Great Britain of the Shell group. It also owns some production in Colombia and is ven- turing for oil in Venezuela and Cuba. The slump in tanker freights badly affected its profits, but the saving in taxation left the net profit higher, so that the dividend was justifiably raised from ls. lid, to ls. 6d. per share. The ordinary investor should exchange into SHELL. Presumably the Shell group carries on with Canadian Eagle for tax- saving purposes (as it is registered in Canada) but it is an investment anomaly.
WHEN last I wrote about DE HAVILLAND I thought that the maintenance of the 7i per cent. dividend on the increased capital was not in question, for it was reasonable to suppose that when the Comet was in full production earnings would expand. The suspension of work on the Comets is, I am afraid, a major disaster. Home defence contracts are probably at their peak and the civil aircraft trade was being relied upon to offset any decline in military orders. Of course, export sales—both military and civil—may come to the rescue but with last year's earnings at 16 per cent, on the increased capital there is not a large enough , margin of cover to make the 7f per cent. dividend safe if the result of the disaster enquiry allows no resumption of work on Comet 2 andl Fended my note in April by saying that at 30s. to yield 5 per cent. the shares were then fully valued but if theY were to come back to yield 5i per cent. theY might be worth buying. They are noia quoted at 25s. 9d. to yield 5f per cent. bat the cautious investor should leave thou alone until the future of the Comet is known' * I HAVE been asked whether an exchanbre from De Havilland into another aircraft share would be advisable. It is always wise to spread the investment risks inherent i° the aircraft industry over several companies. The layman cannot possibly tell whieli model or design will be fashionable Or successful over a period. BRISTOL AEIZ°' PLANE is hhving a great success at 114 moment with its Bristol Freighters and the Bristol Olympus turbo-jet engine. It! new Britannia air-liner is also expected to result in large orders. The company is als° busy with defence contracts, helicopter! (for which it has recently had a large order) and motor cars. But its 10s. shares have come up to-20s. to yield only 4.9 per cent' on the estimated dividend of 10 per cent; Last year's earnings on the increased coilw were equivalent to 22 per cent. This hardll justifies a yield of under 5 per cent. HAwian, SIDDELEY, which I recommended in April Lib 49s., is now quoted at 63s. to yield (nib; 4.7 per cent., but its 15 per cent. dividun..° was covered 5.6 times. This company "! pre-eminent in military and naval aircral; and the new science of rockets and guide° missiles. Its civilian business is spread ever motor-cars, diesel engines, aluminium win! and cable, pre-fabricated houses and 011ie' engineering products. Although this le now the strongest of the aircraft compania the shares are not particularly cheap. Who° they come back in price they might be worm buying.
A FINE recovery was achieved by IEI•19914 AND NICHOLSON in the year ended December} 1953. In the previous year the earnings „°.; this paint manufacturer had slumped bakr on the short-lived trade recession, Olen was not surprising as its business is t° supply industry and shipping generallYi with anti-corrosive paint. But last year rli° net profit was doubled and earning; amounted to about 73 percent. The divide', was raised from 15 per cent. to 17i per cen,a and at 14s. 6d. ex dividend the 5s. siuuv return a yield of 6 per cent.
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