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Earnings are strong for the office equipment and supplies industry through research, restructuring, and successful introduction of new products. Long-term earnings beyond 1996 are enhanced by increased spending for new digital equipment and business forms. Retail chains Staples and Office Depot are rapidly increasing market share. Companies with strong finances and market leadership are timely investments.

Trends in the electrical equipment industry are mixed in 1995, with the automotive sector stronger than the housing market. The European and US industrial markets are becoming more competitive and efficient. Divestment, acquisitions, productivity improvement, and cost-cutting are among factors behind enhanced earnings. Most of these stocks are not timely, but several may be attractive for the next three to five years.

Electronics industry stocks outperformed the market over the last 18 months and remain timely. Electrical content growth in both the industrial equipment and consumer goods industries is having an impact, along with computer and computer peripherals demand. Distributors and computer network manufacturers are also prospering. Electronics industry stocks are timely and well positioned for the conservative investor.

Specialty chemical stocks have performed only moderately, even with level materials prices and strong customer demand. Most foreign economies, except Japan and Latin America, are expanding and companies with large overseas operations are outperforming the market. Several chemical stocks will do well in 1995 and 1996, and most will grow moderately through 1998-2000. Investors must be selective in choosing these stocks.

Gas company dividends were sharply raised in the 1980s and in 1995 are 80% of earnings at some companies. The allowed return on equity was also reduced by state regulatory commissions during the same period, and gas utilities have relied on debt financing as a consequence. Rate planning is changing to advance profits and safeguard dividends. Income investment is difficult in this industry and investors must look for quality.

The specialty retail stores sector, which comprises several categories, has been affected by increased competition and the consumer slowdown in 1995. Stock prices for specialty stores are lower as a result. Higher installment debt, increased saving, and competition will have a negative result on earnings. Investors should avoid stocks in this industry, with the exception of proven companies, such as CompUSA and Circuit City.

Raw materials costs, especially cotton, and consumer price resistance are making profit margins lower in textiles for 1995. The price of cotton has risen to $1 a pound in 1995 and will remain at 80 cents to 90 cents a pound in 1996. Prices are also increasing in wool and synthetic fibers. There is, however, strong demand for T-shirt fabric, fleece, and denim. Investors need to show caution with investments in this industry.

Sales and earnings in the apparel industry were sluggish in the 1st qtr of 1995, and several clothing firms had lower results than for the same period of 1994. Higher costs, especially for cotton, modest orders, and weak demand are the major factors influencing results. This industry will underperform the market in 1995 and 1996, and only two stocks are ranked for timeliness. Investors must be selective when investing in apparel stocks.

Good sales and earnings are being recorded in the electronics industry in 1995. Specialty manufacturers, connector manufacturers, and electronic distributors are the three largest segments of this industry. Communication component makers and manufacturers of security systems comprise the smaller segments. Many stocks are highly ranked for timeliness, but few pay large dividends, and are growth, rather than income, investments.

Electrical equipment sales to the capital goods sector of the US economy are outperforming the consumer goods market in 1995. The growing economy of Western Europe will also make this a good market in 1995 and 1996. The Eastern European, Latin American, and East Asian markets, especially China and India, are also increasing. Several stocks in this industry are timely and are ranked high for safety for the next three to five years.

Stock prices for the specialty chemicals industry have increased since Dec 1994 and are now in the upper half of stocks under review. Expanded foreign and domestic markets have allowed this industry to absorb raw material price increases since the 1980s. Earnings will be good for 1995-1996 and should continue through 1998-2000. Avery Dennison and Loctite are among stocks that will outperform the market through the 1990s.

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.

Short-term prospects for the electrical equipment industry are expected to be good in the industrial and international segments, while domestic consumer markets are expected to languish due to interest-rate sensitivity. Few stocks have attractive investment potential in the immediate future due to their poor timeliness, but over the longer term, they are expected to supply solid returns.

The specialty chemical industry is constrained by raw material price increases and the inability to pass those increases along to customers, and is thus ranked as an average investment for 1995. However, the industry is adapting to the global economy quite well and is benefiting from the increase in international business. The long-term projection for this industry is for it to continue its steady, if modest, earnings growth.

The 1994 Christmas shopping season may exceed forecasts of gloomy economists, and the shares of certain favored specialty stores offer good investment opportunities. Sales of women's apparel, however, remain weak, with the exception of Ann Taylor Stores Corp. Consumer electronics sales are expected to grow, but the furniture sales may fall as home sales suffer from increasing interest rates.

The textile industry is picking up in Nov 1994, with increased profits from the automobile industry and home furnishing textiles. However, the increased cost of raw materials have made profit margins smaller, despite modest price increased in fabrics. The North Atlantic Free Trade Agreement will make a big difference in the domestic industry, as more imports originate from North America, rather than Hong Kong.

The machinery industry is doing well in Nov 1994, with such areas as trucking construction and farming machinery excelling. However, such areas as government markets, pulp and paper and the chemical industry are still in the doldrums. Many manufacturers are benefitted from streamlining their operations during the recession and are competing more efficiently with foreign firms, as a result.

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 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.

Specialty chemical industry stocks are expected to do well from 1994 through 1999. The diversity of the industry will require the investor to review each company's stock separately in order to get the best rate of return. The economic expansion of industries in Europe, the US and Japan bode well for the industry as a whole. The only drawback may be due to the increase in the prices of raw materials.