MORRIS OR AUSTIN SHARES ?
If one is right in supposing that the motor trade is about to enter on a recovery trend, there should be plenty of scope in the shares of the well-spread businesses, such as Austin, Morris and the Humber-Hillman combine. My own preference at the moment would be for the 5s. " A " ordin- aries of Austin Motors, which at 24s. are yielding about 61 per cent. on the last dividend of 3o per cent. This yield, it is true, is less than that offered by Morris Motors 5s. ordinaries, which at 28s. 9d. return over 7i per cent., but the comparison on an earnings basis narrows the gap. On the Austin shares the earnings yield is 8i per cent., against 91 per cent. on Morris.
Both companies should do well in any pick-up in private car sales and both have the benefit of Government orders, but from the market standpoint Austin has the advantage of a very highly-geared ordinary capital, which means that a moderate rise in profits raises ordinary share earnings quite sharply, and of the introduction of a new model in the light car category in the near future. As a lock-up speculative investment over the next few months Austin " A " should turn out well, provided, of course, the recovery in sales is not nipped in the bud by political alarms. * * * *
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