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Lower margins and volume has slowed growth for the food industry early in the year 2000, with lower unit sales and supply disruptions adding to the situation. Promotional activities, strategic plans, and cost efficiencies are being put into place by many companies for further growth in the future. Most of these stocks are expected to lag the market in the year 2000, but investors will find some timely issues in this industry.

Stocks in the machinery industry have suffered early in the year 2000 with interest rate fears and profit-taking affecting the stock market as a whole. Demand is good for these products, however, except in a few sectors, and managers are focusing on cost controls, also. Merger activity in the industry is continuing, but investors will probably find better opportunities in the future.

The household products industry spent much of the year 1999 restructuring and integrating the acquisitions many companies made during the industry consolidation throughout the year. However, the strong dollar and volatile foreign markets will present challenges to the industry during the year 2000, as will the mature US market. These stocks are timely for the year 2000, but investors must be selective in their choices.

Medical services industry stocks have been volatile in the 4th qtr of 1999 due to possible legislative reform giving patients more rights and class action suits against health maintenance organizations. However, more money will be coming into the industry with increased Medicare reimbursements enacted by the Congress, and higher premiums and other rates are expected to aid health maintenance organization earnings. Investors must be selective with these stocks as prospects can vary due to a variety of factors.

Midwestern bank stock prices have been lackluster in 1999 due to concerns over year 2000 problems, rising interest rates, and profit shortfalls during the year. However, rising fee income, reduced costs, and stabilized interest margins, along with the impact of financial services reform legislation, should help profit growth in the year 2000. Investors must be selective with these stocks, however, as only a few are expected to outperform the market.

Property and casualty insurance industry stocks underperformed the market in 1999 and this industry remains negative and untimely. Stock prices are expected to remain difficult and challenging in the year 2000 in spite of financial services reform legislation and rising interest rates. Investors should seek opportunities in other industries for the coming year as earnings estimates are too generous and price rebounds are expected to be short-lived.

The metal fabricating industry has continued to benefit from the good US economy in 1999, and demand, both foreign and domestic, is expected to be good in the year 2000 and later for metal products. Long-range prospects, however, vary in this industry as the various sectors provide materials and components for a wide variety of manufacturers. Several of these stocks offer good growth prospects, but investors need to be selective in their choices.

Technological advances, changed review procedures at the Food and Drug Administration, increased merger and acquisition activity, and other factors were some of the trends that accelerated stock prices in the medical supplies industry in the 1990s. However, market maturation, pricing pressures and economic weaknesses overseas have made the end of the decade more challenging for this sector. Most stocks in this industry will only match the market in the year 2000, but some have good price potential for the year ahead.

The large number of mergers and changing face of the diversified insurance and financial services industries, along with recently passed financial reform legislation by the Congress has melded these two sectors. The use of the Internet and online services is also changing how these services are distributed in the US and traditional financial business may need to alter their business methods. These stocks are timely, but investors need to be selected as the industry is comprised by many diverse segments.

The US banking industry is expected to acquire insurance and other nontraditional financial services lines with the passage of financial services reform legislation by the Congress in late 1999. The bank operating environment will be tougher in the year 2000 with asset quality and other problems, and some of the poorer performers will be acquired by the better financial performers. Investors need to be selective in their choices as there are few timely stocks in this industry.

The food industry is in the processing of change due to consumer demand for convenient and healthy food choices and the organic and natural food sector is growing at a 10% to 12% annual pace in 1999. Results are also being strengthened by marketing leverage across product lines and the divestiture of non-core businesses. Most of these stocks are not timely for 1999 and the year 2000, but several have price appreciation potential.

The weaker US dollar and likely interest rate hikes have hurt machinery industry stocks during the 3rd qtr of 1999 and the industry has become less timely during this period. Overseas markets have gown, as has the power generation market, truck production has risen, but depressed commodities prices have had a negative impact on other sectors. Several of these stocks have growth potential for the long term, but most should track the market in 1999 and the year 2000.

Financial services industry stocks have performed well in 1999, and low inflation, personal income gains, strong financial markets, and a good interest rate environment should aid the industry in the future. The credit card segment is expected to do well in spite of high competition and tight profit margins. Investors need to be selective in their choices as these stocks may not be appropriate for all portfolios.

Worsening loss trends, earnings disappointments, and other factors have provided setbacks to diversified insurance stock prices in 1999 and their timeliness ranking is low for the year. Earnings and profits for the 3rd qtr of 1999 are expected to be tight, also, due to competition and deterioration in the property and casualty sector of the industry. These stocks are not recommended for investor consideration.

Cost control with the aim of income and earnings growth has become the major management trend in the food industry in the late 1990s after several years of overseas expansion, mergers, and acquisitions. The small- and medium-sized consolidators have been the best performers in the industry as expansion is no longer the best method for growth among the larger companies. These stocks are not timely in 1999 and investors have few selections for stock price growth.

The financial services industry has done well during the first six months of 1999, due to the booming US economy, and the industry is expected to do well in the second half of the year, also. The large degree of ownership of stocks, the solid housing market, and high consumer confidence are some of the reasons that this industry should do well, but this could change with higher interest rates. Investors need to be selective with stocks in this industry and make commitments only for the most timely.

The domestic investment company industry includes funds with diverse characteristics and objectives. These differences make it difficult to analyze the industry as a whole. One common factor between the funds analyzed is that each of them trade at discounts to their net asset value. The amount of this discount, though, varies for the funds being analyzed.

The financial services industry did well in 1998. Personal income growth and home ownership levels increased, and these trends are continuing in 1999. This has been accomplished as inflation and interest rate levels remain low. Strong consumer spending is deemed essential for growth in 1999. However, a market correction may effect confidence levels and, subsequently, have a negative impact on finance companies.

Prices and earnings in the medical supplies industry have been under pressure in the late 1990s from government insurance agencies, such as Medicare, and competition within the industry. Reaearch and development, technological innovation, and industry consolidation are some of the methods by which medical supply companies have attempted to cope with the situation. Investors need to consider safety and timeliness factors when evaluating these stocks for selection.

Concern about the Asian economic crisis has spread to the US and this has affected American consumer confidence in terms of expectations over future economic conditions. However, mortgage banks should benefit from lower US interest rates and non-bank and credit card lenders should also do well, regardless of stock-market conditions. Investors, though, need to consider both safety and timeliness when evaluating financial services stocks.

Trading results and loan lossses from the emerging nation markets hurt US bank earnings in the 3rd qtr of 1998, but the economic environment for industry has improved since then. Industry observers believe that service and geographic diversity, along with cost reductions, resulting from merger activity will help bank earnings in the future. There are many opportunities for long-term investors among bank stocks in 1998 and 1999.

Growth prospects in the food industry are limited due to market saturation and the maturity of the industry, but some new trends in US food consumption patterns may help some companies enlarge their markets. One of the new areas of growth is in the low cholesterol, low-fat/non-fat food segment and health foods are now being sold in supermarkets. Several stocks in this industry will outperform the market in 1999, but most are conservative investments.

Stocks in the machinery industry declined during the 3rd qtr of 1998 and are in the bottom 20% of timeliness rankings during 1998's fourth qtr. Machinery industry markets, both in the US and abroad, are mixed, but the European market shows signs of growth in the near future. Investors seeking long-term growth can find several bargains in this industry if they are willing to overlook short-term weakness and accumulate shares slowly.

Many of the property and casualty insurance industry stocks fell in price during the 3rd qtr of 1998, but there are few reasons to purchase these stocks in late 1998, due to the uncertain US economy and poor insurance company earnings. Low interest rates and insurance reserves practices will have an effect on insurance company earnings, as well. These stocks are not well suited for investment in the last qtr of 1998.

Physician-practice management groups, hospitials, and other health care organizations are consolidating in order to cut costs and retain quality services. Earnings for the industry were difficult in 1997, but this should improve in 1998 and 1999, and Federal reimbursement rates for nursing homes will be recalculated. Investors need to be selective when evaluating these stocks as their future earnings prospects are variable.

The Midwestern banking industry has reacted to concerns about the emerging markets overseas and the US economic slowdown, and many bank stock prices have declined during the 3rd qtr of 1998. Bank mergers should also increase in 1999, and many banks are also focusing their efforts on non-interest income areas to ensure efficiency and profit gains. These stocks have only average timeliness in 1998 and are below average for the years 2001-2003.

Financial services firms are expected to continue their earnings gains, but loan, asset and earnings expansion may slow somewhat as economic shifts shake up investors and financial firms slow their domestic expansion. Mutual fund management services have increases assets under management steadily, but crisis in overseas economies could influence corporate profits.

The companies in the diversified company industry are so varied there is no industry commentary for this section. Specific stocks in this section should be evaluated based upon the information on each company page. Some stocks are good investments based upon their rating in the Value Line Timeliness Ranking System for market performance between Jul 1997 and Jul 1998.

Stock valuations for Midwestern banks have increased tremendously in the 1990s, and have ceased to be compelling investments and have limited appeal through the years 2001-2003. Non-lending and fee-based operations have diversified the revenue mix for banks, and loan growth has increased with the steady and stable interest rate environment. Investors need to remain cautious when evaluating these stocks for future commitment.

The financial services industry has benefitted from the economic expansion of the 1990s in the US as an increased number of borrowers and manageable assets have allowed revenues and profits to soar. In addition, commercial banks have purchased many finance companies in order to diversify away from their core operations. These stocks are timely in 1998, but investors need to focus on the least volatile for the next 12 months.

The US government is planning to make some major changes for managed care and Medicare recipients beginning in Nov 1998 and this will have an effect on provider cost controls. Medical supply manufacturers, especially the orthopedic sector, will be affected by this, but new products will aid sales and margins in 1998 and through the years 2001-2003. Investors, however, should select the most timely stocks for commitment.

Diabetes has become more prevalent in the US, and the world at large, with the ageing of the US population and other factors. The market for diabetes and glucose test equipment, as well as insulin therapy needs, has become more important to medical supplies companies, such as Johnson and Johnson and Abbot Labs. Cost controls and new products have combined for good 1998 profit prospects for the industry, and investors should seek timely stocks.

The largest US banks have been lured by long-term prospects into the emerging nations market in the 1990s. However, the economic turmoil of Southeast Asia in 1997 may cause earnings growth to slow. Earnings may be slowed, also, by slower revenue generation and the costs of bank mergers and acquisitions in the 1990s, and other operating expenses. Investors need to be selective with these stocks before committing funds.

Growth prospects for the machinery industry in Asia have remained good despite currency and stock market problems, and also in Latin America. Markets in Europe have recovered somewhat, the US machinery market has fared better in 1997 than expected, and there has been considerable acquisition activity in the industry. Machinery stocks have a mid-range timeliness rating, and there are several good individual investment opportunities in the industry.

Investors have driven up the prices of securities in the property and casualty insurance business, but the industry's profit margins may decline in late 1997 and early 1998. Losses have grown more slowly than costs, but rates are expected to shrink as a result of regulation. Automobile insurance will probably show good results, but investors should think carefully before purchasing stocks of the top-rated casualty and property insurance companies.

Share prices have risen as banks in the Midwest experienced good yearly earnings, but slower growth is expected. Analysts forecast continued consolidation at high prices, as good economic conditions make loans profitable. Although stocks are at an all-time high, prices will probably continue to rise until 2000-2002.