Account gamble
More from Moss
John Bull
The rather more optimistic tone of the market is certainly helping my recent selections with Dunlop up from 102p to 114p and Revertex now at 81ip against 69p. Thus though there are obvious reasons for apprehension, with many important questions on the wage front still to be solved, I am still basically bullish. I particularly take cheer from reading reports such as that from steel stockholder Miles Druce, which said that turnover was ahead by 40 per cent in its first four months trading this year.
So for the next account my selection is Moss Engineering as a buy. Now I appreciate that this may not be a very well known situation but capitalised at about £3.3m there is still a fair market in the shares. The company's operations are in transmission, general and sewage engineering. Over the past five years it has maintained a reasonably steady record with profits in 1972 (to August 31) of £464,000 against 008,000 five years before. The dividend is well covered and earnings on assets are a reasonable 18 per cent.
But for the current year I expect the prospects for Moss are good. At the annual meeting in December last the chairman, Mr Ernest Cars said that weaker areas of group order books were rapidly filling and he expected both sales and profits this year to be higher. Now • Moss has been through a great deal of reorganisation and I feel that the first fruits of this could begin to show through in 1973. For instance, Moss Gear which suffered from a protracted strike in 1972, has been transferred from Birmingham to South Wales and the drop forging subsidiary of Cartwright Bros has been sold. This fits in with the group's plans to concentrate on sectors where the return on capital employed is highest.
All these factors should be working • in Moss's favour but perhaps more important is the general improvement in the country's economy, particularly noticeable from the upturn in the engineering industry. Certainly I find Moss under-rated selling on a historic PE ratio of under 16 and yielding 5.6 per cent at 72p. Apart from Moss for the outand-out gambler I suggest that Lonrho is a good short-term speculation (whatever Skinflint says) and I would not be surprised to see the opposition to Tiny Rowland fizzle out like a thunder flash. Then the shares will be ripe for upward reappraisal.
Previous page
