INVESTMENT NOTES
By CUSTOS
AL the Budget rise and a lot more was lost by the end of the Stock Exchange account on Tuesday. The good news had been largely dis- counted and the shadow of the election had begun to restrain new buying, but the underlying strength has been maintained and if the election is put off until the late autumn, the equity share market should resume its rise. Some shares have held up well, particularly the hire-purchase finance companies, the popular demand for which has been stimulated by the doubling of the interim dividend of MERCANTILE CREDIT and the doubling of the profits of LOMBARD BANKING. The gilt-edged market, however, is still suffering from its shock at the over-all Budget deficit. Its fear of large new borrowings was confirmed by the announcing of a £25 million issue of 5 per cent. 1980-83 stock at 951 by the London County Council. Now that the 'tap' has been ended in Funding 5-1- per cent. 1982-84, which is now quoted at 104,16 to yield 5.35 per cent., this new LCC issue is pretty certain to go to a discount. The new 5-1 per cent. Hawker Siddeley convertible debenture started off well with a premium of 4+, but at the moment of writing has fallen to 3i. This is an attractive stock to buy on a fall. At a point lower there would be an option to convert into the ordinary shares for five years at not much over 30s.
Television Rental Shares
The Budget has given a special bonus to televi- sion rental companies, first, because the investment allowances apply, to sets on hire, being plant and equipment of the hirer; secondly, because the removal of purchase tax from replacement televi- sion tubes lowers their operating costs. RADIO RENTALS, an old recommendation, has now risen to 36s. 9d. to yield only 2.7 per cent. A cheaper equity is that of RELAY EXCHANGES which has just raised Eli million through the issue of Joan stock and nearly £1•1 million through an ordinary share issue at 20s. This new money will replace expen- sive short-term borrowing and add to current profits which the chairman said were 'most encouraging.' As the company's turnover has greatly increased, the chances of a raising of the dividend of 221 per cent. are good. The new 5s. shares at 31s. 3d. yield 3.6 per cent.
Wool Textile Shares
The rise in the price of wool should direct investors' attention to wool textile shares. At the recent auctions in Australia heavy buying from the Communist countries, as well as from Britain and the Continent, has advanced wool prices by as much as 20 per cent. as compared with the auctions a month ago. I have already drawn atten- tion to ILLINGWORTH MORRIS. These 4s. shares at 4s. Od. to yield 64 per cent. should be worth buy- uy- THE SPECTATOR, APRIL 17, 1959 ing. Another attractive share is WEST RIDING, WORSTED at 54s. 6d. to yield 64 per cent. on the 17 per cent. dividend last covered 1.3 times. The interim dividend in respect of the year to August next is payable in two months' time. More specu- lative is PARKLAND MANUFACTURING, whose 5s. shares at 15s. 6d. yield 8.45 per cent. The final dividend for the year ending February last will be paid in June. The last distribution was 26+ per cent.
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