COMPANY NOTES
By CUSTOS
I HAD expected to fill these notes this week with shares on an attractive new yield basis. But the remarkable recovery from the 41 per cent. Bank rate slump makes the mar- ket look too high. On Wednesday of this week the Financial Times index of leading industrial shares returned an average yield of 4.69 per cent. as compared with a yield of 4 per cent. on Old Consols. But what happens when the gilt-edged market falls, as is expected, and the yield on Old Consols rises to, say, 44 per cent. or more? Will the investor not want to buy his equity shares on a yield basis of 54 per cent.? There are no 'blue chips' on anything like that basis. It is therefore all the more important for the investor to search the lists of the lower ranks and refuse to buy except on a satis- factory dividend yield of around 54 per cent. and an earnings yield at least double. Here is a share for illustration which I have previously recommended. BRITISH PLASTER BOARD 10s. shares dipped below 20s. but have now recovered to 20s. 6d. to return over 5f per cent. on last year's dividend of 11} per cent. and nearly 11 per cent, on the previous earnings ex EPL. The interim divi- dend was raised from the equivalent 34 per cent. to 5 per cent, and if the final is kept at only 74 per cent. the yield on 124 per cent. would be over 6 per cent.
It is pleasant to record a share rising regardless of the change in Bank rate. I recommended PLATERS AND STAMPERS Ss. shares in October last at 30s. 6d. They are now a firm market at 38s. 6d. as a result of the excellent results for last year. Profits were 70 per cent. up and earnings on the equity capital rose from 54 per cent. to over 96 per cent. The dividends were increased more than I had anticipated. The final was stepped up from 18i per cent. to 324 per cent., making 40 per cent. for the year against 25 per cent. The yield at the present price (cum dividend) is 5.2 per cent. Here is a test case for Mr. Butler's dear money policy which is designed to restrain home consumption. Platers and Stampers make a wide range of kitchen articles (pressure cookers included), bathroom fittings and scissors. It is highly efficient and has pro- fited from the boom in house building. It is also in the export trade. If I were a share- holder I would keep my position : if 1 were a buyer I would wait for a market reaction. analysis of the Rhodesian copper shares which proves statistically that RHOKANA is the cheapest of the producers if the value of its investments is subtracted from its market price. Rhokana holds over a quarter of Mufulira, a third of N'Changa and nearly a half of Bancroft, the new develop- ing mine which is likely to be another N'Changa. At £344 Rhokana yields 7 per cent. It is a 'heavy' share and for the small investor the holding company RHODESIAN ANGLO-AMERICAN which owns over half of Rhokana is probably the best medium for a copper investment. At 91s. 3d. it yields 8 per cent.
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