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The rapid consolidation within the the banking and thrift industries has led to few legal differences between banks and thrifts, and more thrift mergers are expected within the next three to five years. The insurance playing field for thrifts and banks has been leveled by congressional action, and the two industries are more competitive. Many thrifts have become takeover targets, and investors need to evaluate these stocks on an individual basis.

The petroleum services industry and oil field equipment and supplies industry had possibly the best stock price and earnings results of any industry in 1996 and, although Jan 1997 saw a downturn in these results, despite overall market increases, these equities will be leaders for 1997. Recent trends in consolidation, energy consumption, economic growth and technologies will please both short and long-term investors. Individual Safety rankings should be examined before investing in specific companies.

The Midwestern banking industry has become more timely as of Jan 1997 and rankings for these stocks are expected to rise. Higher loan loss provisions and weaker commercial loan demand slowed Midwestern bank earnings growth in 1996, and loan loss provisions are expected to remain high in 1997. The prospects for these stocks for the next three to five years are reflected in their price levels, although several stocks are favorably ranked for 1997.

The debt/capital ratios and book values of companies in the property and casualty insurance industry have been raised by the drop in interest rates. However, lower interest rates hurt earnings for the industry with slower investment income growth and higher capital amounts, which puts pressure on rates and lowers profit margins. Although there are some strong companies in the industry, current multiples cannot be sustained through the year 2000.

The petroleum services industry and the oilfield equipment and supplies industry stocks have the highest timeliness rating of any industry, have shown record growth and profits over the last ten months, are seeing a rebirth of offshore oil and gas drilling and a jump in stock prices that make many companies' securities a prized investment. Mergers, acquisitions and consolidations during the past years' along with carefully planned price slashing, have given these industry stocks the good results that investors seek.

The thrift industry will experience several takeovers from 1996 through 2001. The industry has an abundance of capital that is utilized for stock buybacks, acquisitions and dividend increases in 1996. The satisfaction level of thrift stockholders has remained high during the early 1990s. Thrift profits are also increasing.

The real estate investment trust industry has an average rating for timeliness of investment. These stocks are good for diversification of a portfolio and have good returns and liquidity. Management performance is important when investors select a specific real estate investment trust. Management teams provide added value if they are efficient and are experts at finding good investment opportunities.

Small capitalization stocks within the property/casualty insurance industry are favored in 1996. There are also opportunities in the reinsurance segment of the industry. Revenues and earnings are not rising because of catastrophe and weather-related losses. Favorable reserve development has also decreased. Many insurance companies are restructuring.

The share-price and earnings momentums of the banking industry in the midwestern US are having difficulties. As a result, it is not a good investment. Stock performance has been good because of the belief that there will be additional banking industry consolidation in the future. Profit growth is expected to continue in 1996 and 1997 but not at the pace of 1995.

The real estate investment trust (REIT) industry is analyzed with recommendations on individual companies. The California real estate market is improving and REIT performance is expected to follow. Regional malls, poor performance during much of 1995, is apparently rebounding during 1996. REITs are considered fixed-income equivalents, and investors should consider earnings growth, capital structures and payout policies of the individual stocks when investing.

The industrial services industry reports good earnings in 1996 in response to economic expansion, and profit growth is expected to continue in 1997. Market consolidation in the industry and increased outsourcing in the 1990s by government and business are having a positive impact on these companies. These stocks are timely for 1996 and 1997 and will outperform the market, and many offer growth potential for the next three to five years.

Investors, seeking the high current income and moderate long-term growth offered by real estate investment trust (REIT) stocks and equities, should disregard dividend yields and focus on the management teams of individual REIT company's ability to evaluate and enhance real property. REIT securities have generally performed below average in the recent past but shopping center REITs may become valuable as retail sales improve and mergers and consolidations occur.

Slightly increasing oil prices will aid the oilfield equipment and services industries, but land drilling will decrease with the 20% drop in natural gas prices in 1995 from 1994. Oil companies are also subcontracting out more often. Offshore drilling is improving due to a royalty relief bill, 600 undrilled leases located in the Gulf of Mexico, and technological innovations. Several stocks are attractive, even with uncertain prices and other risks.

The major activity of the thrift industry, whether savings banks or savings and loans, is mortgage lending. Federal and state regulations which have restricted thrift growth have been struck down after the savings and loan crisis. Thrifts have expanded by merging, which has also resulted in cost-cutting and streamlining measures. Although the Savings Association Insurance Fund is not in good condition, thrifts with good balance sheets may be good investments.

Real estate investment trusts (REITs) have turned in mediocre performances in 1995. Depressed consumer spending and the imminent reorganization of the retail industry, a leading REIT sector, have discouraged investment in REITs. On the bright side, declining interest rates have spurred REIT acquisitions. REITs remain a good vehicle for income growth, but investors should limit themselves to highly capitalized companies with strong balance sheets.

Prospects for Midwest bank stocks in 1995 are only fair, but projected double-digit earnings share increases for these banks over three to five years make them good long-term investment bets. Still, Fifth Third Bancorp, Norwest Corp and Star Banc are timely choices. In 1995, falling interest rates will bolster bank earnings, but declining yields for bank stocks and a slowing economy will put pressure on margins.

Property and casualty stocks, and reinsurance stocks in particular, are doing well. The latter are benefiting from the feeling that there is increased risk in the primary market. Overall, the property casualty insurance industry has accumulated a surplus since Hurricane Andrew. The 3-5 year earnings growth potential of three of the four reinsurance stocks tracked is excellent. They should yield returns in the mid-teens or higher.

Financial reports for the 1st qtr of 1995 indicate that the earthquake, in Kobe, Japan, did little harm to property insurers, and the rest of 1995 should remain profitable. Commercial line underwriters are having better premium and ratio gains than those which carry personal lines. Insurance stocks will underperform the market in 1995, but good earnings give defensive protection to investors.

The Federal Reserve Board's decision to increase interest rates in 1994 damaged the strength and stock prices of real estate investment trusts (REITs), and this trend will continue as long as the Fed maintains a tight monetary policy. The extremely low prices of some REITs might be attractive to investors, and real estate fundamentals will be good in 1995. However, investors should be prepared for lower yields and falling stock prices unless interest rates begin to fall.

A strong Midwestern economy is boosting loans in that region, making bank stocks there a good investment bet through the 1990s. Moreover, Midwestern banks enjoy the lowest problem loan and charge-off ratios in the industry. On the downside, these banks are beset by shrinking lending margins, sluggish fee income growth and charges against depreciating securities portfolios.

Oilfield service industry firms have proliferated during the 1980s, and, as a result, many companies have struggled to survive during the 1990s. The industry is undergoing consolidation, and the surviving firms are lean and strong. New technology, such as direction drilling, subsea completions, coiled tubing and 3D seismic, are given an added boost to operations. Investors will find opportunities within the industry, but safety rankings are important to observe.

Investing in real estate investment trusts should be done carefully because an increase in interest rates has caused a decrease in the value of the trusts. An investor should evaluate trusts over the long term and determine the solidity of their balance sheets. Those trusts with large capitalization rates will be able to enter the equity market more easily. Finally, the high yields of a trust is more important than dividends.

Individuals should invest in the stocks of thrifts that have high financial strength and high safety ratings. The industry is currently in the midst of numerous acquisitions and consolidations. The volatility of interest rates during 1994 caused individuals to refinance homes and to purchase new homes. This activity has been beneficial for the thrift industry and further increases in interest rates will increase the economic wellbeing of the industry.

The prospects for Midwestern banking firms' stocks are evaluated. The growth of banks' fee-based earnings has slowed, raising questions about efforts to expand fee-based businesses. Interstate banking legislation could prompt increased acquisitions activity, concentrated primarily in states that have had restrictive interstate banking laws. Evaluations of individual stocks are included.

The prospects for property/casualty insurance stocks are evaluated. The performance of property/casualty stocks has been dismal in 1994. Insurers' earnings have picked up, but they are still unspectacular. Investors could be overplaying several problems facing the industry, such as the impact of Superfund reform legislation. Evaluations of individual stocks are included.

Diversified natural gas industry stocks are in general not timely and investors are advised to invest for 1997-1999 returns rather than 1994 returns. Exxon and Amoco are among the companies that have positioned themselves to take advantage of expected new demand for natural gas, partly because the fuel can meet stricter environmental standards. Average daily consumption in California, Arizona and Nevada could increase more than 1,100 million cubic feet before 2000.

The stocks of property and casualty insurance companies suffered a mediocre year in 1993, and uncertainties of the bond market and the possibility of decreasing insurance rates make 1994 difficult to predict. After the disastrous 1992, many investors expected an upturn in the insurance industry, but rising bond values and unrealized capital gains slowed any new growth. The outlook for the long term looks good, but price action in 1994 should be average at best.

The market for crude oil continues to be lackluster. This is chiefly because most of the world's major oil importers are currently in an economic slump. In addition, the US is using less crude oil and more natural gas. As Russia begins to produce more oil, and Iraq struggles for permission to enter the petroleum market, supplies look to increase, further hampering prices. Oil stocks are currently less popular with portfolio managers, providing opportunity for investors looking for long-term stocks.

Oilfield services and equipment stock prices rose in 1993 but these stocks are still generally best for long-term investment consideration. The market for oilfield services/equipment is expanding. A number of factors have contributed to this growth. More wells are under construction as natural gas becomes increasingly popular. In addition, passage of NAFTA should aid the industry as Mexico pushes to increase its natural gas production. Finally, as aging drill equipment and vessels atrophy, demand for oilfield equipment has increased.

Stock prices for thrift industry companies have remained relatively flat in 1993 although a number of issues are still considered timely. Many thrifts have cleaned up their portfolios of bad loans yet problem assets remain for a number of institutions. Acquisitions of thrift companies are expected to increase, as purchasing has proven to be a quick way to build a large financial organization. Investors are advised to invest in thrift equities that have high capital ratios.

Investors are advised to seek Real Estate Investment Trusts (REITs) with good prospects for growth from funds from operations, strong balance sheets and little debt. Dividend yields should make up at least 95% of cash flows in order for REITs to retain their tax status. Investors should also note that REITs are subject to interest rate fluctuations which are currently under control due to economic conditions.