Account gamble
Glynwed's growth appeal
John Bull
Selecting a share for a specific account is a dicey business made twice as difficult in an uncertain market.
When there is a definite underlying bullish trend punters can be fairly happy that good results will be given a good reception and bad figures often are treated leniently.
The current wave of industrial discontent, however, changes the whole pattern and the warning I give is to be on one's toes and quick to appreciate changes in sentiment.
Even though the market was badly shaken with the dock relations problems I am glad that I was right about Fruit and Produce Exchange of Great Britain (see July 22) — the shares moving up on the results from 254p to around 30p.
This week's fancy is Glynwed. Here is a solidly based stock which should justify attention on its performance. Also, with the dock troubles prominent in investors' minds, it is worth noting that exports account for a relatively small proportion of the group's turnover.
I feel that Glynwed will be heading for startlingly good results, basically for three reasons: steel stockholders are doing better; the housebuilding boom is continuing; and motor manufacturers are working flat out.
To put this into perspective, some 32 per cent of Glynwed's 1971 profit was from the components for the building industry division, 304 per cent from household and industrial appliances division, 25 per cent from components for motor and engineering industries division and 124 per cent from merchanting and distribution.
Over recent years, Glynwed has established a much broader base. This, in the main, reflects a lively acquisition policy, the two big purchases being Allied Ironfounders and John Chashmore. Glynwed, for instance, is now in no way dependent on the vicissitudes of its operations in copper tubes, as it was before the Allied Ironfounders bid. Other acquisitions, such as that of W. H. Paul in March this Year, will further help downtail Glynwed's business.
I would estimate that this year Glynwed Will see earnings grow in the region of 60 Per cent. On this basis at 200p the shares
are on a prospective PE ratio of under 131. With the interim results pointing the Way to the full year figures, I believe the
market will take keen interest in Glynwed's announcement, due next account.
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