Venturers' Corner
Canadian stock markets have been so badly battered by the Wall Street hurricane that the impression seems to have become quite widespread that business in Canada, as in the United States, has declined precipitately in the past twelve months. Neither the official figures of production and employment nor the statements of the earnings of Canadian industrial companies support this view. On the other hand, nine companies out of ten are showing sharp increases in profits on the basis of which stocks look under-valued, provided, of course, the industrial improvement can be maintained. Personally, I think it will be, and has excellent Chances of broadening out if, as seems at least an even chance, American business picks up this year. Here, then, is a promising field for the speculative buyer who is willing to take an indirect hand in America's recovery. There are quite a number of Canadian common shares which should be worth buying from this point of view, such as Steel Company of Canada, now 63 dollars, against last year's " high " of 93, Howard Smith Paper at 13/ dollars, compared with a " high " of 34 dollars, and Dominion Steel " B " which have come down from 281 to 14 dollars.
A share which should not involve quite the same degree of risk but which offers a prospect of substantial appreciation if things go well, is the 5 per cent. cumulative zoo dollar preferred of Massey Harris, the farm implement and machinery makers. No dividends have been paid. since November, 1930, so that arrears now amount to 36 dollars per share, but the company is making a good recovery out of depression. Gross profits for the year ended November 30th, 1937, rose from 1,725,862 to 3,339,529 dollars, and net profits, after covering interest, depreciation and bad debts, were 1,043,729 dollars, equivalent to 811 dollars per preferred share, against a loss of 58,413 dollars in 1936. .The preferred shares, at 47 dollars, or only II dollars more than the arrears of dividend, do not look dear in the light of these much-improved earnings. They should go higher on any sustained recovery
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