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The household products industry is viewed as defensive by many investors due to mounting international economic problems and uncertainty as to the growth prospects of the US economy. The larger companies in this industry are able to deal with mass merchants on an even-handed basis, but many smaller ones may need to merge or form joint ventures. Investors need to be selective when evaluating opportunities in this industry.

There has been a lack of interest in household products industry stocks as it is mainly a stable, mature industry in the US and market growth is not likely. However, acquisitions, foreign markets, and product innovation can lead to growth for this sector. Investors need to focus on individual stocks which are timely and participate within current industry trends.

Volume growth cannot be expected to outpace population growth in the US for the household products industry as the industry has matured. However, there is room for international growth for the industry, even with dislocations. Efficiency, acquisitions, and product innovation are the main issues in the industry during the 1990s. Investors need to evaluate these stocks on an individual basis before selection.

The domestic market for the household products industry in the US has matured in the 1990s, and the per-capita use of household products does not have much room for growth. The international market for these products, however, is better, and there has been a revolution in the market and distribution channels in the US. Investors need to seek only the most timely companies in this industry for commitment.

The household products industry has managed to stay in the middle of the pack both in economic growth and development and in investment strength largely through its ability to add innovative variations to its commonplace products and by broadening to the international market where its products are not commonplace. Individual companies that have learned to work with mass merchandisers, have consolidated, and are producing new products will provide special situations for investment in an industry whose securities usually trade at high relative P/E multiples.

The household products industry is more challenging in 1997 because of business method changes that benefit retailers over manufacturers. Distribution has changed and mass merchants may not accept the products that manufacturers wish them to carry. Major household products manufacturers will continue to have the critical mass necessary for business operations.

Stocks in the household products industry are not timely in 1996, due to the defensive traits of the industry's profits in a strong economy. Revenue and earnings have only been mediocre since 1992, also. Mass merchandisers have become larger and more sophisticated in their inventory management, and small manufacturers must change to survive. Further industry consolidation is anticipated, along with internal structural transition.

The household products industry is not as resilient as it used to be and its stocks are not as wise an investment as they used to be. Its profits are not growing as effortlessly due to a decrease in consumer demand for housewares. Mass merchants are forcing manufacturers to follow their demand guidelines. Consumable products companies are wiser investments.

Stocks in the household products industry are no longer as defensive as they once were, and have a low timeliness ranking for 1996. Computer-based inventory models are now widely used by retailers and product inventories are not as highly stocked as before, and consumers are not spending at previous levels due to personal cost-cutting. Investors should consider these stocks only on an individual basis.

Household products historically have been defensive, with relatively stable profits compared to other industries. Uneven earnings have changed the appeal of these stocks, however. Hard goods, such as small appliances, and soft goods, such as toothpaste and soap, are the two main subgroups of this industry, both of which are seeing less demand. Investors in this industry need to evaluate these stocks on an individual basis.

Household and consumer products have usually been considered defensive stocks when the economy is weak. Consumers purchase smaller, rather than larger items when economic prospects are poor. However, better inventory management by retailers, order pattern changes, and other factors have made these stocks less attractive. Even though earnings potential are high for some, investors should approach these stocks with caution.

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