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More than 18 companies in the foreign telecommunications industry plan to raise funds in the capital markets in 1996. Many of the government-owned companies, such as Deutsche Telekom, plan to privatize in whole or in part, as well. Competition in international services has been proposed by Oftel of the UK. These stocks are not timely for 1996 as they are affected by restructuring, competitive pricing, and other pressures.

The global semiconductor trade agreement with Japan is due to expire in Jul 1996. US manufacturers are not as willing to agree to the expiration as other countries because foreign trade only represents a mere 23% of Japan's semiconductor market. New products in consumer electronics and personal computers are providing a growing Asian market and there is a new digital video disk standard. These stocks, however, are not recommended for investment in 1995.

Electric utilities are changing from a monopolistic to a competitive environment. This is leading to more incentive ratemaking, greater cost reduction efforts, increased foreign investment, and further industry consolidation. These stocks are trading near the upper level, and investors need to be selective when choosing electric utility issues. Dividend growth, debt ratio, and other factors must be considered.

Foreign semiconductor companies are profiting from strong computer chip demand and increased market share. Consumer electronic sales and earnings, however, have decreased. PolyGram and Philips have become the European leaders in both consumer and semiconductor sectors, but the strong yen is making profits for Japanese companies difficult. PolyGram and Philips stocks will outperform the market for the next three to five years.

Supermarket chains are expanding private-label products, both in variety and quality. This has kept prices for brand-name products low, even though market share has not increased. Food companies are more active in new product introduction and increasing their markets in Eastern Europe, Latin America, and Asia. Several of these stocks are timely for conservative investors for the next three to five years.

Demand for telecommunications is increasing in the Far East, both in fixed line and cellular services. Installation of 150 million lines is anticipated by the year 2000 costing $1500 each. The largest Asian market is China with a population of 960 million and a low ratio of access lines. This industry will underperform the market for 1995 and 1996, but has a large earnings potential for the year 2000 and beyond.

The automobile parts industry is expected to slightly outperform the market in 1995 and 1996, and post moderate earnings. Less automotive emissions testing and the slowing economy could have a negative impact. However, increased car age, Clear Air Act implementation and European auto growth will help this industry in the next three to five years. Several stocks, such as Genuine Parts and Eclin, have current and long-term appeal.

The Clinton administration has announced tariffs on Japanese luxury cars which will take effect June 28, 1995 unless a last-minute agreement is reached. A trade war has been avoided in past years, but several factors, including the instability of the yen, make it less likely that Japan will submit to US demands. German automakers, such as BMW and Mercedes, would be the most likely beneficiaries of the tariffs, not US manufacturers. Automobile stocks should be avoided, due to a possible trade war and other risks.

The California Public Utilities Commission is requesting electric utilities to submit plans to lower rates in California or establish an electric power pool. The pool, which must be approved by the legislature and perhaps by the Federal Energy Regulatory Commission, will impact Eastern utilities. These stocks, which pay high dividends, have outperformed the market, but need to be carefully evaluated by investors.

Sales and earnings for the precision instrument industry have outperformed the market in 1995, and this will continue in 1996. Cost cutting, demand, higher prices, and volume have been the main factors. Foreign demand in the European and Japanese markets, where many companies do business, will aid in earnings growth. Several stocks in this industry are good investments for the next three to five years.

Japanese automaker profits will be hurt if the Clinton administration's 100% luxury car tariffs are put into effect June 28, 1995. Japan is unlikely to agree to managed trade and numerical targets. Honda and Toyota have seen their market shares change in Japan and the US, and will report lower earnings for 1995, and Nissan may report more losses. Stocks in foreign automakers are not recommended investments for the next 12 months.

Growth for food processors is limited, in partly due to the growing market share of private-label brands, and the US market has reached its saturation point. The growing markets of Latin America, Eastern Europe, and Asia have become the focus of the larger-capitalized companies. Low fat and health food products are growing segments. Conservative investors will find several safe stocks with good returns in this industry.

Global alliances and modernization are impacting foreign telecommunications firms in the 1990s. The U.S-China telecommunication volume is forecast to treble by 2000 along with increased calling between the U.S. and Europe. The telecom market in Germany, third after the US and Japan, will increase from $40 billion to $75 billion in the same period. Earnings from 1996 to 1998 will be held down by restructuring and competitive pricing.

Electric utilities in the Eastern United States have seen their stock prices rise in early 1994, but the financial strength of the industry will grow too slowly to merit heavy investment. Analysts expect kilowatt-hour sales for 1995 to rise only 2-2.5%, and state regulators are becoming increasingly reluctant to approve rate increases.

Manufacturers of precision instruments saw sales figures continue upward in early 1995, a trend that began in mid-1991. Analysts expect the upswing to continue through 1996. High demand will support firm pricing, leading to greater increases in profits than sales. The industry has also made significant cuts in fixed costs.

Japanese and European carmakers are experiencing mixed financial results as of early 1995. Honda Motor Company Ltd and Toyota Motor Corp are seeing their profits rebound after several years of decline, while Nissan Motor Company Ltd continues to struggle. Volvo AB has seen significant sales increases, while Daimler-Benz AG's Mercedes-Benz unit saw its financial contribution to the group's recovery offset by ongoing struggles in other divisions.

Increased demand for replacement auto parts have helped the industry boost prices and increase profit margins. Proposed changes in the Clean Air Act of 1990 would benefit the industry but are facing significant consumer opposition. The North American Free Trade Agreement is also likely to provide long term benefit for the industry.

Generally weak sales in the first two months of 1995 have caused the Big Three US automakers to cut back production schedules. Ford Motor Co and Chrysler Corp are both offering significant buyer incentives to minivan buyers in what might develop into a price war. US automakers are likely to take significant damage due to Mexico's economic hardships.

Foreign telecommunications companies are not recommended for short-term investment, but various factors, including surging demand for information services and rapid technological advances, will favorably influence their long-term earnings and growth potential. Developing countries are building high-tech infrastructures where none existed before, and foreign telecom companies are providing the necessary financing. Return on that investment will probably not show until the next century. The transitioning market has led to low share prices, and an increase in those prices is not predicted to take place in the near future.

Foreign telecommunications firms will face greater competition, more regulation, international alliances and additional cellular communication services. The major conquest for telecommunication contracts by foreign firms is China because of its rapidly growing economy. China expects to invest approximately $100 billion in telecommunication equipment by the year 2000. High stock price performance is expected from Reuters, Ericsson and Vodafone in 1995.

The prospects for aerospace/defense industry stocks are evaluated. Defense spending cuts could level off, if the Nov 1994 Congressional elections result in gains for conservatives. Lockheed and Martin Marietta plan to form a 'merger of equals,' but the deal is subject to antitrust review. No upturn is in sight for the commercial aircraft sector. Evaluations of individual stocks are included.

The food processing industry is expected to experience weak prospects as a result of an improving economy and increasing competition in the food reseller market. Investors are shunning defensive investments and instead are concentrating on cyclical and capital-intensive companies. Competition from distribution points such as warehouse clubs and mass merchandisers has led resellers to reduce inventories, which impacts the food processing industry. Few investments in this industry are promising, but conservative investors could profit from long-term gains from large-capitalization issues.

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 aerospace and defense industry should continue to exhibit little if any growth in the near term. The airliner manufacturer sector could exhibit strong growth in 1995 or 1996 due to an increase in demand by air transportation operators. The defense sector of this industry should continue to exhibit declines in its performance, part of which is due to the net decline in military appropriations. Investors should be careful with their choices in this industry.