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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 computer and peripherals industry is expected to continue growing through 2000. There is expected to be some slowing of growth over the near term due to rising interest rates in the US and economic downturns in Japan and Europe. Competition in the industry is intense, which should dampen strong gains. However, demand for computer equipment remains strong, and the client-server computing sector continues to be a business trend.

The electrical equipment industry is expected to experience favorable trends in many parts of the world. Upward economic trends in the US and Europe are already helping to boost the fortunes of companies in this industries. Additionally, electrical equipment companies with a presence in Asian countries will be poised to reap enormous benefits if the area's expected growth becomes a reality. Investments in this industry are not expected to have strong performance gains, but long-term investors should consider some of the offerings nonetheless.

The office equipment and supplies industry will experience stronger growth in many business segments. Reasons for this growth include an improving US economy and increased investments in office equipment. However, segments such as those that include business forms companies are finding that their margins are eroding due to competition from electronic data interchange and sales of laser printers and paper copiers. Investments in this industry should focus on companies with strong leadership and financial positions.

The semiconductor industry continues to experience strong growth, and expectations are for a continued surge over the near term. Increasing backlogs indicate that growth, which has ranged from 20% to 40% from 1991 to 1994, is expected to continue, although at only a 15% to 20% rate in 1995. Investments in this industry are expected to be the most dynamic of all other industry as increased competition helps spur further growth.

An evaluation of the rate of return for various oil company stocks. There is also an evaluation of the downstream operations of various companies because of a decrease in petroleum prices and a change in laws governing the industry. A decrease in refinery production and a decrease in the number of service stations has also resulted. The electric automobile will probably not be a cause of concern for the industry.

Investors have been oversold on the information superhighway and the demise of over-the-air TV. Broadcast has proven surprisingly resilient - via Fox, new networks and redoubled production efforts. The 'highway' will be no more pervasive than personal computers. Because it is too early to say what medium will predominate, investors are advised to go with companies that have a proven track record in programming, regardless of the medium.

Environmental industry securities have been hurt by weak prices caused by overcapacity at landfills. But the supply/demand differential has begun to narrow, except among hazardous waste companies. The latter are being hurt by the growing use of inexpensive cement kilns. At the opposite extreme, water treatment firms are doing well. The three- to five-year stock potential of the group as a whole is positive.

Restaurant stocks continue to do poorly because of fears about national healthcare reform and the possible elimination of the Targeted Jobs Tax Credit program. Lower food prices and low labor costs should keep restaurants afloat, and expansion plans will facilitate growth. Still, restaurant stocks are not recommended for aggressive investors.

The industrial service firms that are benefiting most from the economic upswing are seven that offer personnel placement services, especially Manpower and Kelly, which do business in Europe. Outsourcing is proving to be a boon for these companies. Essential service firms are also doing well, particularly ServiceMaster LP and Rollins Inc. The diverse nature of this industry gives it a mixed investment outlook.

The computer software and computer services industry is poised for strong growth through 1994 and through the 1997-1999 period. Demand for software applications will continue to grow, helped in part by price cuts in personal computers. Software companies, furthermore, are expected to consolidate in an attempt to achieve better economies of scale. Computer services companies are also expected to post strong gains, helped in part by the increasing divestment of peripheral businesses. Investments in this industry are probably not appropriate for conservative accounts.

Speciality retailers with strong merchandising talents will outperform their competition in 1994 and 1995. Factors such as moderate inflation and a weak US dollar will create a business climate that can be exploited by those retailers with lean, competitive operations. Investments in this industry should be focused on companies that have high ratings for financial strength and that have capital returns that are above the industry average.

The textile industry will experience modest growth through the end of 1994, but prospects should improve in 1995 and beyond. Improvements in the economy and higher interest rates could lead to a shift in consumer spending from big-ticket items to less costly goods, such as apparel. Additionally, a new business environment resulting from the General Agreement on Tariffs and Trade could enable US textile companies to exhibit strong performances because of their technological superiority. Investments in this industry are favorable through the 1997-1999 period.

The electrical equipment industry is poised for a strong recovery. Improving economic conditions throughout the world will help drive improved growth, although near-term prospects are believed to be weak at best. The industry's domestic markets have seen improvements as consumer confidence grows stronger, and overseas prospects look especially promising. Investments in this industry are unlikely to experience strong gains, although conservative investors may find good prospects through the 1997-1999 period.

The computer and peripherals industry is expected to experience improved growth during the Oct-Dec 1994 period and in 1995. The industry is experiencing its regular summer sales slump, and some analysts predict the weak market will continue. However, personal and mainframe computer demand is expected to improve with the end of the summer sales season, which should drive the predicted improvements in the computer and peripherals industry.

The office equipment and supplies industry is experiencing improved prospects. Manufacturers of office equipment and electronic systems should experience strong profit growth as a result of recent product introductions. Companies that manufacture business forms are expected to experience improved prospects as a result of their increased concentration on acquiring forms-management accounts. Office supply companies, such as Office Depot, are acquiring supplier wholesalers, which should boost their influence in the sector.

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 semiconductor industry will experience strong profit expansion through 1994, although their is some risk that overcapacity will lead to a slowing of growth. Semiconductor chip demand has been strong because of strong personal computer demand. However, domestic manufacturers' book-to-bill ratios have dropped from 1.13 in June 1994 to 1.08 in July 1994. Additionally, some manufacturers expect demand growth to rise to about 25% in 1994.

The integrated petroleum industry is experiencing a strengthening of crude oil prices, but several issues could affect prices in the future. The strong price of crude is attributed to stronger demand and weakness in the supply sector, part of which is caused by civil war in Yemen and civil unrest in Nigeria. The effect of allowing Iraq to market their vast supply of crude and the political and economic problems in Russia that threaten development of the country's vast petroleum reserves are yet to be known. Further issues that could affect the future of this industry are presented.

Investor interest in the broadcast/cable television industry has increased dramatically in 1994 even though earnings are not particularly impressive. This is because of widespread excitement over the so-called 'information superhighway,' which would supposedly bring television viewers an estimated 500 interactive channels. Many questions about the promises of this industry have yet to answered, however, such as whether viewers would have the time for 500 television channels. Investors are advised to proceed cautiously.

The restaurant industry has seen its stocks falter in the early months of 1994. For the most part, this downturn has not corresponded to the relatively stable performances of most restaurant industry fundamentals. One area, however, that does threaten the industry's economic condition is health care reform, which would raise expenses considerably. Growth areas in the restaurant industry include casual dining establishments and value-marketed fast food.

Overall performance in the environmental industry has dropped from the record earnings levels set in 1990. Traditional hazardous waste companies have faced competition from new technologies and an industrial move toward liquid waste. The outlook for solid waste disposal appears to be improving slightly after three years of reduced earnings. Currently, however, the only advisable investment within the environmental industry is water purification services.

Companies that provide essential services have survived the economic downturn of the early 1990s better than others. Personnel placement services, in particular, have benefitted from a cautious economic climate where employers are more apt to hire temporary workers than take on the costs of permanent employees. Investors should consider investments in this industry carefully and stick with higher-rated stocks.

Mergers and consolidations in the computer software and service industries continue. For example, Computer Associates International Inc plans to buy ASK Group Inc, and Novell Inc agreed to acquire WordPerfect Corp and also the spreadsheet line from Borland International Inc. Many companies are doing very well because lower computer prices are spurring demand for software. Many software and computer service company stocks are good buys and can be expected to perform better than the market.

Computer and peripherals industry stocks are better poised for long-term than for near-term growth. Long-term growth should be helped by company restructurings to reduce operating costs. Durable equipment spending is forecast to rise 12% in 1994, 9% in 1995, and 7-8% in 1996 and 1997. However, only a few companies will surpass market averages in 1994. Potential investors should also note the volatility of these stocks.

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.

The office equipment and supplies industry should benefit from the general US economic recovery and increasing capital spending after years of recession. Office Depot and Staples are expected to post earnings growth of 40% and 30% respectively in 1994. Other companies, such as Xerox, Diebold, Pitney Bowes and Scitex, are well positioned to benefit from a recovery in the European market. Potential investors should consider niche leaders with timely stocks.

Semiconductor industry stocks should prove favorable investments for 1994, as the year is expected to generate record sales and revenue for many integrated circuit producers for the second year in a row. Growth in 1994 is expected to continue regardless of overall US economic trends. However, the industry could suffer in the longer-term from overexpansion and from the limited appreciation potential of advanced-price stocks.

Electric equipment industry stocks are not timely on the whole and most issues show little dramatic growth potential out to 1997-1999. However, a strengthening US economy should help the industry, and Asian markets hold promise for the long term. Several companies, including Baldor Electric, Emerson Electric and General Electric, have boosted their profits by cutting operating costs and improving productivity.

Petroleum companies that specialize in refining and marketing offer the most timely stocks in the petroleum industry. A 30% drop in the price of oil from spring 1992 to spring 1993 has helped these companies, which consume large quantities of it. Integrated oil company stocks could be helped both in the near-term and the long-term if the Organization of Petroleum Exporting Countries cuts production.

The diversified industrial services industry offers many strong choices to potential investors. Temporary agencies have benefitted from the business trend to replace permanent with temporary employees. Companies offering services that cannot be postponed are also profiting. These include the pest control service companies, ServiceMaster LP and Rollins Inc, and the uniform cleaning service companies, UniFirst and Cintas Corp.

The restaurant industry is forecasted to perform above average during all of 1994, though stocks appreciated at a slower than average rate during the first quarter. Sales have been partly hurt by adverse winter weather conditions. Potential investors will find several timely companies offered. Franchise operations tend to register higher operating margins than company-owned operations.

The computer services and software industry will do well in 1994 and throughout the rest of the decade. Demand for word processing, database management systems and electronic spreadsheets is expected to continue to grow. New services in the media and home market are also expected to grow. Many firms that have found their niche in specific service markets, such as payroll processing, will increase their business opportunities.

Textile industry stocks will continue to show mixed results in 1994. Clothing textiles are not projected to do as well as other segments, which should be helped by automotive and home furnishing market turnarounds. The rising price of cotton is an unknown factor that could adversely affect stocks. Potential investors should consider Culp in the short term and Dominion and Cone for investments out to 1996-98.

The diversified retail industry can offer investors with various portfolio goals at least one strong choice. Low interest rates are boosting the housing and home improvement markets. Companies aiming to expand in the unsaturated urban markets or in Canada and Mexico due to the implementation of the North American Free Trade Agreement may be good investment choices. Potential investors should study individual Timeliness ranks.

Returns on investments in the office equipment and supplies sector in 1993 were mixed, as some of the larger companies were hurt by slumping sales in Europe and Japan. Office superstores continued to do well, capturing more market share in 1993 and the industry will be undergoing a consolidation and restructuring. Investors seeking high returns should look elsewhere for the short-term. Certain stocks can provide a good return depending on how much exposure they have to overseas risk.

The computer and peripherals industry should see double-digit gains again in 1994, powered by users' increasing demand for smaller, faster computers and assisted by the industry's seemingly unceasing trend toward obsolescence. Domestic sales should improve but overseas deliveries should continue to falter, given the recessions in both Japan and Europe. Increased competition among producers has made it harder to maintain market share, especially amid price wars and consolidation. Investors should not expect these stocks to greatly out-perform the market.

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.

The electrical equipment industry should be strong in 1994 as the US economy recovers, boosting both the telecommunications and industrial electronics sectors. The continuing recessions in Japan and Europe, however, should slow any explosive growth in the short-term. Investors should be aware that none of this industry's stocks is expected to significantly outperform the market in 1994, and only a few are worth investing in for the period 1994-96.

The semiconductor industry performed well in 1994, as the demand for integrated circuits and computers continued to grow. Lower-priced personal computers allowed for greater product turnover, and the wireless and cable industries were also major buyers of semiconductor technology. Investors interested in profiting from the expected continuation of such growth should be aware that these stocks have a history of volatility, and have been known to suffer major price retracements after being overvalued.

Temporary service company stocks may suffer with general US economic recovery, but other sectors of the industrial services industry should not be greatly affected by economic fluctuations. Strong investment possibilities include the pest control companies, Rollins Inc and ServiceMaster LP; the uniform manufacturers UniFirst Corp and Cintas Corp; and the automation services company, Equifax.

Restaurant stocks may be a favorable choice for conservative investors who do not expect high dividends. Industry stocks rose 7% on average between Oct 1993 and Dec 1993 when 14 of 19 tracked companies saw share prices rise. Companies such as Pizza Hut that have catered to consumers' demand for value-priced products are proving successful. One looming industry uncertainty is potential rising labor costs under the Clinton administration's national health care reform plan.

Tobacco industry stocks are among the least timely across industries. The short term future is clouded by price wars between branded and private label cigarettes and by a proposed 1994 excise tax. Overseas markets, especially in Eastern Europe and China, and long-term investments are the best choices for potential investors in this industry. Risk-takers could see profits out to 1996-1998.

Adventurous investors willing to risk volatile equity will find an excellent array of computer software industry investment choices, including both short- and long-term stocks. This group is expected to be among the top quarter industries for price performance. Oracle and Computer Assoc are well positioned for long-term growth because they are helping to supply personal computer networks to the growing numbers of operations that are downsizing. In 1993, the industry will probably announce record sales and profits.

The textile industry has been adversely affected by the conservative buying approach retailers have taken during the recession and by higher inventories. However, the passage of the North American Free Trade Agreement will help open foreign markets and manufacturing possibilities. Meanwhile, textile prices have fallen, and some facilities have closed during the Nov 1993 holidays, and may also have to close over Christmas holidays. If interest rates remain low, new housing sales could have a positive affect on household furnishings and related textiles.

The specialty retail industry will improve during the 1990s, as retailers continue to streamline their businesses and use high technology to keep inventory low. The economy seems to be improving in Nov 1993, and consumers are beginning to spend again. Another indication of consumer confidence is in the show of colored apparel planned for spring 1994. The stocks within this group should do well from 1993 to 1998, as retailers establish better working relationships with manufacturers.

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.