Portfolio
Into equities, into Clover
Nephew Wilde
I had intended to talk about the commodity market this week. However, I feel circumstances have changed sufficiently to justify granting myself licence to stray from my intended aims. In fact I could not resist delving back in the stock market to see whether everyone had absolutely lost his head. There was no comfort or reassurance on this score from my broker, Wotherspool, since he had been advised by his firm to take a holiday ("come back when you like"), as there was precious little business being transacted. Thus my usual source of information, now semi-redundant, is enjoying the slopes of Switzerland.
I should straightway say that I am not attracted to equities in general. There is so much uncertainty as to make meaningful analysis absurd. After all, who knows what ICI or British Leyland is heading for? The miners' dispute and the oil crisis loom too large at the moment to expect anything but a creepy market.
Even so the thought does occur to me that whether we are out of work or not we still have to eat. This is why I am attracted to the food sector and, in particular Clover Dairies. This company, which is a milk processor and distributor, grocery retailer, manufacturer and distributor of soft drinks, has an excellent record. Clover also has (or had at its last year-end) no nasty overdrafts and earns about 70 per cent on its assets, which cover a quarter of the current share price.
As for prospects, with the opening of seven shops in Staffordshire and more planned and the expansion into soft drinks, the outlook is very encouraging. The shares have fallen rather less than most in the recent market slump and now stand at the year's low. At 95p, in fact, Clover is selling at nine times earnings and yields 7 per cent. With its dividend well covered and prospects bright, even in this climate Clover is a firstclass holding. This is certainly the sort of situation that one should be looking at now taking a two or three year view. An Investment would also, constitute a sensible present for a grandchild this Christmas.
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