INVESTMENT NOTi

By CUSTOS

Athe moment of writing the profit-take outweighed the new buyers and the TU share markets have come back. This is wha been expecting for some time and a 10 per ce would not be out of place after this hectt When shares like BRITISH WAGON rise 8s.

back just as sharply when the jobbers are supplied. The investor must therefore be, cautious and avoid the shares which look P.', larly high on an earnings yield basis. Soo the store shares seem vulnerable on the GUS 'A' at 57s. 9d. yield 6.6 per cent. on Of and MARKS AND SPENCER 'A' only 3.6 per 75s. 9d. TIMES FURNISHING, which has 11`` favourite of mine—readers who follows` advice must,have doubled their money stay, now yielding only 6+ per cent. at 18s. .", capital bonus of 100 per cent.). UNrrED is only a little better at 61 per cent. A better' ing is made by DEBENHAMS at 46s. 9d. to

i

per cent. on earnings. This company is to' 1 a0 tedly following up its debenture issue 0, rights issue of one-for-ten ordinary shares 11: The chairman has explained that the development programme has been extend" ti accelerated, which will improve efficiene`, profitability. Since the year to July, 1959, profits advanced over 12+ per cent., sale' 91s. in a single day or when UNITED sun ft rise 10s. to 99s. in a week there is evideil, 1. an extreme shortage of stock on jobbers' I" °''r Shares which rise sharply for this reason call' I k,1

ki,

or Oi„

Chown a satisfactory increase over their previous record and the directors anticipate paying divi- dends on the larger capital at not less than the Increased rate of 161 per cent. of the previous ear, At 46s. 9d, the 10s. shares yield 3* per cent.

this dividend.

aper Recovery

In the search for a 5 per cent. yield the investor Est now explore the fields of the less prosperous tides. The most obvious is the paper- and board- aking industry where such a well-known com- ity as A. E. REED can be bought to yield 51 per nt. Profit margins have been cut because the dustry is still suffering from the surplus capacity Stalled in the last few years, which has to be fully depreciated in the trading accounts although it is of being fully used. The half-yearly report of

0 he company which was published this week sug- ests, however, that the turn has came and that

he profit trend is now upward, even if the pace is ow. Sales have advanced by 8 per cent. and gross

rii ading profits by 61 per cent. After depreciation e profit, before tax, is only 5 per cent. up, but it the direction which counts. The effect of the 3 'lilting strike, it is said, was not great because f the diversity of products. Incidentally, the new rrugated case plant at Wigan came into opera- e ion during the half-year and is rapidly building 41) to full production. I was previously nervous of oil 'andinavian paper competition from the pro- Dosed 'outer' free trade area, but I note that the

directors say that these dangers have been exag- iterated, although there are problems. A. E. Reed

an [hares have been as high this year as 54s. 9d. and is low as 42s. 6d. and at the present price of 'Os. 9d. to yield 51 per cent. on the 14 per cent. dividend last covered 1.6 times they are not unattractive.

pal