Investment Notes
By CUSTOS
THE Stock Exchange reaction to the Mac- millan purge was one of extreme caution. The City assumes that there will be a change in economic policy—towards re-expansion and per- haps more control—but it is not at all sure that the new team is capable of carrying it out with- out fresh wage-cost inflation. Equity shares im- proved on balance, but business is at the low summer ebb and it will be the autumn before the institutions show their hands. On the whole 1 regard the new Government as helping to consolidate the equity share markets. The chances that the worst has been seen have, I would say, been improved. The good export figures strengthen that belief.
Good Reports,
Here are two good company reports to help improve sentiment in the industrial markets. I was particularly pleased with ithat of CLIFFORD MOTORS as I had recently recommended the shares. In a year when motor output was down 5 per cent. or 6 per cent., the company has been able to increase its pre-tax profits by nearly 10 per cent. How much is due to- the acquisition (in conjunction with Amalgamated Engineering) of Specialloid is not stated, but this new interest is expected in a full year to enable the comPanY, to increase its earnings further and its dividend' probably to 30 per cent. For the last year the dividend is again 25 per cent. (2.6 times covered) with the 2-1 per cent. tax-free payment repeated out of capital reserves. At 9s. 9d. the 2s. sharfs now yield 5.1 per cent., or 5.8 per cent. if the per cent. is added. The other good report was that of REDLAND HOLDINGS, the building Materials, group (brick, tile and concrete), which increased its trading profits by no less than 42 per cent;,: for the year to March 31. This followed uP°o . large capital expenditures, including the purchat of the Mountsorrel Granite Company, a ready' mixed concrete plant, and other interests. Tlf dividend has been increased to 20 per cell' (against an equivalent 15 per cent.), which is °,v,tir twice covered. At 25s. 9d. the 5s. shares Pe' 3.9 per cent.
United Molasses
A broker suggests in a reasoned analysis that the shares of UNITED MOLASSES are a good ?lc- change from the shares of depressed shiPP,Ing companies. This company trades in, and still's' molasses, but over the years since 1956 the portion of net income derived from these activ1 ties has been reduced from 90 per cent. to 14 per cent., while that from investments has rtseif0 from 10 per cent. to 26 per cent. Nearly the company's capital is, in fact, held in !nr, form of investments, including a large in Distillers. The shipping position is not like to improve in the near future, but the motassc; trade is now more stable and new uses ha'n, been found for it. The strong underlying fide cial position enables UM to stabilise its dend and the directors have announced that. 01] tribution in the current year will be maintained' if this means some reduction in the cargs- forward. The 10s. shares have fallen from - in 1959 to 23s. and now stand at /5s. 3d- which they return 9.6 per cent. on the 15 2 cent. tax-free dividend.
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