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Increasingly reciprocal trade between the US and the Far East is providing an exciting and rapidly growing market for the US electronics industry. Capital equipment is an area where US manufacturers have an advantage, and as Far Eastern factories become more involved in parts fabrication, they will need state-of-the-art equipment. Several US companies are actively involved in Far East ventures, including Harris Corp, California Microwave and Varian Corp, making them potentially sound investment choices.

The electronics industry's success will greatly depend on changes to the marketplace. Those companies producing products for nonmilitary markets are expected to outperform companies targeting military markets. Additionally, electronics companies that produce telecommunications equipment are believed to constitute the fastest growing segment of the industry. The fastest growing geographic markets are expected to be outside the US, such as in Europe. Other aspects of the industry are covered.

The electronics industry is expected to perform favorably through July 1995. Profits are expected to gain 40% in 1994, and sales are forecast to grow 20% during the same period. Investments in this industry have a high potential for significant gains, but stocks in this industry also have high risks. Companies in this industry include manufacturers of electrical, communications and security equipment. The electronics industry gained about 8.3% over broad market indexes since the last report on the industry.

The electronics industry is relatively volatile because rapidly changing technology creates short product cycles. Potential investors should therefore be cautious in selecting stocks. As a whole, the domestic industry should be boosted by growth in the distribution, communications, and automotive sectors. Operations in Japan and Europe will likely suffer until those economies turn around, as early as 1995.

It is expected that, with a few exceptions, 1994 will be another good year for companies in the electronics industry. Much of their recent fortunes have been dependent on the high demand for personal computers and peripherals, especially telecommunications devices and wireless technology. Investors need to examine individual issues to determine whether the companies in question have adapted to the marketplace by diversifying their product lines.

Earnings forecasts are positive for many companies within the electronics industry due to expectations of continuing demand. Manufacturers of communications, distribution and connector products have had strong earnings that are expected to continue. Investors are advised to be selective in their choice of electronics industry stock issues and pay attention to certain low Price Stability ratings. Earnings for this group are projected to grow 26% annually at least through 1996.

(NYSE:AYD) 3rd qtr. 9/28 1991 1990 Sales $40,118 $35,638 Net income $2,845 $1,896 Income/share $0.56 [...]