COMPANY NOTES
By CUSTOS THE stock markets still lack a posi- tive lead. The gilt-edged boom has .,/\ been temporarily halted by the funding issue and the rather ridicu-
lous rise—however slight—in the Treasury bill rate last week. (The authorities are still fumbling over the rate of interest.) However, the tone in the industrial share markets remains firm and there have been some good reports to stimulate investment interest. LEYLAND'S results were better than most people expected with trading profits nearly 25 per cent, up. The dividend of
12+ per cent. was maintained on the capital in-
creased by the recent 'rights' issue and was covered nearly three and a quarter times by earnings. I have previously recommended these shares which at 44s. 6d. give the still attractive yield of close on 5.7 per cent. A rise of 17 per cent. in gross profits and 10 per cent, in the net was reported by INTERNATIONAL COMBUSTION and the dividend was increased by 2+ per cent, to 22+ per cent., being covered twice by earnings. At 23s. 6d. the 5s. shares yield 4.7 per cent. This is not unreasonable for a company engaged in the manufacture of mechanical stokers, steam boilers, mining machinery and some nuclear- power equipment. But in the capital goods in- dustry I prefer STEETLEY, which has just recorded a 22 per cent. rise in its net profits. This company is a leading producer of heat-resistant materials and caters for the iron and steel, cement, glass and other industries. At 59s. the shares yield 4+ per cent. on the 13 per cent, dividend which was covered nearly three times on earnings.
The expected issue of ENGLISH ELECTRIC, which had been depressing the market a few weeks ago, has been postponed : meanwhile, an unexpected increase in profits and dividend has been announced for 1956. Profits before depre- ciation and tax were over 6 per cent. higher and after providing more for depreciation earnings on the equity, capital (increased by the one-for- three 'rights' issue in 1955) came to 37 per cent. against 36 per cent. The dividend has been in- creased by 11.per cent, to 14 per cent. The shares rose to 56s. and now yield 5 per cent., which is still attractive. Some investors who want to take an interest in the electrical-nuclear age leave out English Electric because of its aircraft com- mitment, but I cannot see that the Canberra bomber is at the moment a disadvantage. The company is well placed in the heavy electrical industry, including the manufacture of electro- heat equipment, and is expected to receive with its associates the fourth contract for a nuclear- power station. The shares can be held confidently for further appreciation.
In view of the decline in Wall Street, British investors will find a number of American shares at quite attractive prices on the long view, but in view of the uncertainties I would confine in- vestment to the oil, chemical and electrical industries and the utilities. Yields—without allow- ing for double taxation relief—can be obtained of 5+ per cent. on BETHLEHEM STEEL, 3+ per cent. 011 STANDARD OIL OF NEW JERSEY, over 4 per cent. on FORD and 5 per cent. on many utilities. The tax relief almost doubles these returns (depending on the tax paid by the recipient). I would advise investors to consult their brokers on the technique and mathematics of investing in dollar shares. They will find it very rewarding.
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