INVESTMENT NOTES

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Tim short down-turn in markets would have gone further if the sellers had not suddenly been deterred by the strikingly good half-yearly reports from important companies, particularly Courtaulds and Marks and Spencer. The market had not realised that in the last half of 1958-59 cot.at-ritmos profits had advanced by over 60 per cent., and were agreeably surprised to find that in the six months to September a further advance of 121 per cent. had been secured. It may now be estimated that earnings for the whole year will be around 271 per cent. against 19 per .cent, in the Previous year and that the total dividend will Probably be 12; per cent. against 91 per cent. In 11.ite of the sharp rise in the shares to 58s. 9d. a Potential yield of over 41 per cent, can be regarded as attractive. It is possible that more interest will now be taken in other textile shares—both cotton and wool. The .Government is paying for the scrapping of old and redundant plant in the cotton textile industry and it is thought that the chief beneficiaries of this benevolent intervention will be INGLISH SEWING COTTON and LANCASHIRE COTEON. These two shares return 5.1 per cent. and 5.3 per eent, at present market prices and their dividends are 1.3 and 1.9 times covered respectively.

Wool Textiles

There has been a remarkable recovery in id Woollen textiles, not only at home but in the 1, European and. American markets. 1 hear that the Nils of ILLINGWORTH MORRIS are once again CI'Working at full capacity. This company's final le dividend for the year to September will be an- 1.1.0unced next month and I will be disappointed It the year's distribution is not raised to, 16 per ent. The company is still extending its trade. r Interests and is now d majority shareholder in the LiProsperous SALTS SALTAIRE Which paid an in- II' creased dividend in June in respect of its year to

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March next. Illingworth Morris 4s. shares have risen to 9s. 3d., but if my surmise is right they are Still very cheap to yield a potential 6.8 per cent.

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A combined purchase of these shares and Salts Saltaire at 7s. to yield 5.6 per cent. on the last dividend (which is pretty certain to be increased) should prove profitable.

Road Material Shares

Investors are busy calculating how many more hundreds of millions the Government must spend each year on our roads and wondering which com- panies will derive most benefit from the increase. The equity shares of the contractors who build the roads, if they are obtainable, have long ago been pushed up to very high prices, and I think it will be of more interest to the small investor to review the road material companies. Their shares do not enjoy a free market and one of them— ROADS RECONSIRUCTION---has lately been made tighter by a 'partial bid' from a private company which I trust will be rejected out of hand. The directors now virtually promise a one-for-three scrip bonus, higher profits for the year to March, 1960, and a higher dividend. On the indicated 14 per cent. the shares, at 32s., return a yield of 4.3 per cent. HILLHEAD HUGHES, owning quarries near Buxton, have lately been rising in the market and at 31s. yield only 3.6 per cent, on the 221 per cent. dividend last covered twice over. This is likely to be raised in respect of the year soon ending. TARMAC seems high enough on a dividend yield of 2.3 per cent. and an earnings yield of only 51 per cent.

Masson Scott A small company called MASSON scow, manu- facturers of paper-making machinery, with a capital of £300,000 in 4s. shares has an excel- lent record and a fine reputation in the trade. For the year to March, 1959, its profits were down as a result of increased competition and higher costs, and equity earnings fell from 78 per cent,

to 54 per cent. Even so there was a three times cover for the dividend of 171 per cent. In the current year demand for the company's products has sharply improved and a new trading agree- ment with its principal customer, Walmsley Bury, has been signed which will help considerably. An amalgamation with this company is not impos- sible. At the current price of 13s. 9d: the yield is just over 5 per cent.