COMPANY NOTES
BY CUSTOS THE best course for the bewildered investor is to forget the stock markets for a time until a clearer and brighter light is thrown on the outlook. Our economic policy at home is under fire, President Eisenhower is walking in circles round a sick-room in a hospital and bids are being made for shares which are firm today and doubtful tomorrow. The only sure thing is that we are still in a 'bear' market. TRINIDAD OIL was quoted at 41s. when it received a bid of 80s. 3d. from an American oil company. The price jumped to 70s. until the protests from misguided people and politicians began to roll in. So the market tell to 63s., recovered to 70s., and will be up and down until the Government has approved the deal, as it should. The offer should never have been disclosed until Government sanction had been obtained and the jobbers should have stopped dealing in the shares until that had been decided. This 'open market' banner has been flown too freely (Continued on page 838) COMPANY NOTES.—cont. from page 837 on the Stock Exchange mast. Not long ago dealings took place in BRITISH PETROLEUM on a false agency message about the divi- dend. Yet these dealings were allowed to stand instead of being expunged. I would like to see the Stock Exchange take a stronger line and suspend dealings in any case where directors have made obscure statements of profits and dividends or where take-over bids are in the air.
1 have always put METAL Box among the best six or twelve 'growth' equity stocks this country possesses. The results for the year to March last fully justify its high investment status. Profits before tax have increased by 174 per cent. and after tax by 21 per cent. Profit margins appeared to have been well maintained. The amount earned for the equity was 344 per cent. and the dividend has been held at the equivalent 10 per cent. on capital more than doubled by the share bonus and the rights issue.- The directors had warned shareholders that they would exercise dividend restraint this time and not pay more than 10 per cent., but if net profits show another expansion of 20 per cent. this year it is not unreasonable to look for an increase in the dividend for 1956-57. The shares moved up 3s. 6d. on the report and at 51s. yield under 4 per cent. if the dividend were unchanged or nearly 5 per cent. if it were increased to 121 per cent. By contrast the report of COURTAULDS was disappointing and con- tained a warning that profit margins were being narrowed. However, the earnings of its overseas subsidiaries were higher and the dividend of 10 per cent. allows a yield of 5.6 per cent. at the present price of 35s. 6d. The pressure on profit margins was severe enough to cause a cut in the dividend of BRITISH 'CELANESE from 10 per cent. to 8 per cent. This may be a forerunner of other disappointing industrial reports. It emphasises the unique merits of METAL Box as the bluest of 'blue chip' equities.
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My fears regarding FORESTAL LAND have been confirmed. The directors have fol- lowed up last year's satisfactory profits by cutting the dividend from 12 per cent. to 9 per cent. There has been a sharp drop in sales in this country and it appears that substitutes are cutting into their market. The shares have dropped to under 20s.—at which the yield is over 9 per cent. An exchange into a more promising share would seem desirable and I suggest on the fall in the copper market RHODESIAN ANGLO- AMERICAN at under 5 to yield at least 74 per cent.. (without allowing for tax relief), with BANCROFT at 40s. (a developing copper mine) to give the spice of capital apprecia- tion. Ultimately Bancroft will be almost as large a producer as N'CHANGA (though not of such high-quality ore). I suggest Rhodesian Anglo-American because (a) dividends could be maintained even if the price of copper were to fall further, and (b) the price of the shares has fallen from 64 to 44, which over-discounts the recent slump in the metal. The long-term prospect for the cheap copper producers is excellent.
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To end with another high-yielding but stable enough share, SAMUEL WILLIAMS. which runs a dock and lighterage business next to Ford's at Dagenham, has beet depressed by the recent issue of one for two new shares at 8s. 6d. At Is. 6d. premium the shares are the lowest they have been for ten years. The 1954-55 profits were very satisfactory : those to March.• 1956, will be more or less maintained, The directors forecast a dividend of l5 per cent. on the increased capital so that at the present price a potential yield of 74 per cent. is secured. This seems to be attractive. A real estate property is some hedge against a further fall in the value of money.
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