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Leading analyst examines the consumer & industrial services sector in this special Consumer & Industrial Services report from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info535.htm.

TWST: Alex, how well have the consumer and industrial services stocks rewarded investors over the past six to 12 months?

Mr. Paris: Very well. The consumer and industrial services companies have been a safe haven for investors’ capital — a safe haven with growth. The education sector, a niche within consumer services, was up over 36% on average during 2001. Uniform services, a niche within the business-to-business industrial services, was up 42% over the same period of time. What these sectors have in common is that their business is typically contractual or requires a commitment, and as a result, revenues are very predictable. Having the luxury of predictable revenues allows management within these companies to plan their businesses better and more accurately and report more consistent earnings. That has been very attractive to investors, particularly in these very turbulent times.

TWST: Are some of these companies more economically sensitive than others?

Mr. Paris: Definitely. I mentioned postsecondary education. Enrollment tends to be countercyclical. When working adults lose their jobs, they go back to school in greater numbers. When young people graduate from high school and the job market is soft, they also tend to continue their education and enroll in school. So enrollment tends to be countercyclical, and enrollment plus price increases equals revenue. They tend to do well during economic recessions.

TWST: And their revenues are usually up front, aren’t they?

Mr. Paris: Revenues are up front, but are recognized ratably over the length of the course. Cash is up front. DSOs are low as a result. Bad debt is virtually non-existent because a majority of the money comes through federally guaranteed sources. Business services, on the other hand, don’t get their money up front, but it tends to be contractual and is more positively correlated with the business cycle. In the case of uniform services companies, when employment levels go down within existing accounts, revenues are negatively impacted.

TWST: So where will the most attractive investment opportunities be in this sector near term, say over the next six months and longer term, over the next 12 to 18 months?

Mr. Paris: Within education, my number one buy is ITT Educational Services (NYSE:ESI) . That company, as I mentioned, is trading at 26 times earnings and is growing their enrollment faster than many of its peers. So I think I’m getting a nice trade-off there. I’m getting a company that’s growing pretty rapidly at a p/e ratio that’s only a slight premium to the market. I think ITT is a very safe bet at current levels.

TWST: Alex, we’ve run through a great many companies and it’s been most interesting talking to you. I understand that you’ve had a very successful year, and in fact, I believe that you were highlighted as one of the best stock pickers of the year.

Mr. Paris: Yes. Thank you very much. I appreciate that. StarMine, a leading independent provider of objective ratings of Wall Street securities analysts, recently announced that I was number 4 among the Top 10 Stock Pickers on their 2001 analyst survey. We were particularly pleased to make the list given that the company measures the results of over 3,000 analysts. When it comes down to it, stock picking is part science, part art and part luck. As they say, I’d rather be lucky.

This special report includes:

1) Consumer & Industrial Services - In an in-depth (5,700 words) Analyst Interview, Alexander Paris, Vice President at Barrington Research Associates, Inc., examines the outlook for the sector including and shares specific stock recommendations.