(FORTUNE Magazine) – Gaze out to the horizon, friends. It's time to gear up the old portfolio for the new year. What will 1994 look like? Three pros with three different approaches to investing tell FORTUNE's Susan E. Kuhn which industries they think will stand out -- and which companies in each should shine.

Denver is more than a ski town. It's a hotbed of superior mutual fund managers, and John Kaweske, 52, of Invesco Trust Co. is one of the best. Over the past five years his $3.9 billion Invesco Industrial Income fund has returned 17.7% on average annually, tops among all equity-income funds followed by Morningstar. It has also placed in the top five each year on Fortune's list of the best-performing mutual funds, first compiled in 1990. WE THINK there are a lot of crosscurrents in 1994. I am anticipating minor tightening by the Fed, which is going to react to a stronger economy. At some point there will be a 10% to 12% correction in the stock market. Nonetheless, stocks will end the year higher, perhaps up 5%. We are looking aggressively for companies that will benefit from an expanding economy. Certain countries show very good prospects for economic growth and are intent on building up their infrastructure. For that reason I like several global telecommunications stocks, including Telefonos de Chile, Telefonos de Mexico, Telefonica de Espana, and Hong Kong Telecom. Chile has about ten phone lines per 100 inhabitants. We see that expanding to 15, a 50% increase. Hong Kong will benefit from explosive growth in China. Telefonica de Espana is actually an indirect play on Chile, because it owns 43% of Telefonos de Chile. All these companies are expanding earnings about 15% per year. Telefonica and TelMex are the cheapest stocks, selling at 12 times our 1994 earnings forecasts. But I own all four because I think they will benefit from scarcity value for three to four years. There aren't many high-quality global telecom stocks to buy. Semiconductor stocks offer a good way to play a recovering U.S. economy. They fell 25% to 30% recently over concern about a slowdown in the explosive growth in personal computer sales. I think it is a good buying opportunity. Technology leaders like Intel, Motorola, and Texas Instruments are hard to compete against. By the middle of this year Intel will unveil the next generation of its Pentium chip. Today the stock sells at $64 a share, or 13 times earnings. Semiconductors are at the heart of telecommunications, cable, and interactive media advances. These stocks should return some 25% this year.

Melissa Brown has been head of quantitative research for Prudential Securities in New York City for seven years, so it's hard to believe she's only 36. But given the reams of data she runs through her computers, youthful energy is a plus. Her market valuation model was bearish on stocks early in 1987 and in 1990. Today she thinks stocks are still a buy -- selectively. STOCKS are going to beat cash and bonds for the first half of 1994. We are betting on a strong international economic recovery, especially in Europe. I am looking for an 11% return for stocks in 1994. Since July, my model has predicted that growth stocks will outperform value stocks, and so far that's been a good call. ((Value stocks are cheaply priced companies; growth stocks consistently expand earnings.)) By any measure -- P/ E, price to book, price to sales, dividend yield -- value stocks are expensive. The only cyclical stock group we like is autos, which are on course to produce superior earnings gains. GM is one of the firm's best ideas. The stock is $57 a share, and the company could earn as much as $6.05 a share this year. Growth stocks are cheap because they've been out of favor for two years. I like them for another reason: These companies tend to get a greater percentage of earnings from overseas. I think the most attractive sector is technology. Stocks like Compaq Computer and LSI Logic are cheap and will benefit from stronger overseas sales. Compaq is a $75 stock selling at 16 times the past four quarters' earnings. The P/E is low, quarterly earnings have come in ahead of analysts' expectations, the earnings growth rate is strong, and the ''relative strength'' of the stock price, a technical indicator that charts potential for more advances, is good. At $16, LSI sells at 17 times earnings. Earnings should jump from an estimated $1.10 in 1993 to $1.50 this year. I also like financial services stocks, which have sold off lately because investors think interest rates will rise and hurt these companies. I know these stocks are traditionally thought of as value buys, but the names we like are companies with earnings growth. Continental Bank and Norwest look attractive. Continental is selling at seven times earnings, and we expect profits to increase 11% per year for the next five years. Norwest, at $25, sells for 12 times earnings with a projected five-year average annual growth rate of 15%.

Rao Chalasani, 49, chief investment strategist at Kemper Securities in Chicago and a champion asset allocator, is also positive on stocks that will benefit from global growth. SINCE MARCH, I have suggested that individuals maintain 35% of their portfolios in U.S. stocks, 20% in U.S. bonds, 20% in foreign stocks, 15% in foreign bonds, and 10% in cash. The U.S. bond market has seen its best days. For 1994 the yield on the 30-year Treasury bond could go from today's 6.2% to as high as 6.7%. I think the stock market will produce returns of about 8% next year, which is my estimate of the average annual return for stocks for the 1990s. But 1994 will be more volatile than 1993, as greater unrest in the bond market affects stocks. A 10% correction in the stock market in 1994 is possible. The U.S. economy will be stronger in 1994 -- my estimate for GDP growth is 3% -- and I expect that improving foreign economies will also give a lift to U.S. stocks. That's why I think 1994 could be the year of the multinationals. Specialty chemicals are a great global business to buy now. The stocks look cheap, and the possibility of expanding P/E multiples is good. HB Fuller and Air Products & Chemicals get over 25% of revenues from overseas. Fuller sells adhesives and should easily expand earnings 20% per year. At $35 a share, it is selling at 14.6 times expected 1994 earnings. That's a 14% discount to the market. Air Products, which makes and distributes industrial gases, is $46 a share, 17 times earnings for the year that will end September 1994. I also like stocks selling at low P/Es that have solid earnings potential where expectations for future performance have been deflated. Banking stocks, for example, are out of favor, but we like banks that operate in areas of strong economic activity. Look at Banc One of Columbus, Ohio. It is a $39 stock selling at 13 times 1993 earnings with a 3.1% yield. Its earnings have grown at a 12% to 15% annual pace in the past few years, and I expect that to continue. PNC Bank in Pittsburgh ($29) is selling at ten times earnings and yielding 4.4%. Both investments could easily return 10% or more next year.