BAXTER INTERNATIONAL INC. $38 (New York symbol BAX; WSSF Rating: Average) makes medical equipment through three main divisions: Medication Delivery makes intravenous equipment and systems; the Renal unit makes dialysis equipment; and the BioScience division makes various drugs as well as equipment that separates blood plasma. In 2005, the company had to recall 250,000 of its Colleague infusion pumps, which provide intravenous drugs to patients. A potential defect in the pump’s battery and air detection system could cause it to shut down. Baxter is working with the Food and Drug Administration (FDA) to fix the problem. Baxter sold $85 million worth of these pumps in the first half of 2005....

C.R. BARD INC. $74 (New York symbol BCR; WSSF Rating: Average) makes medical equipment in four main fields: vascular products such as stents and catheters; urology products for incontinence and drainage; oncology products that detect and treat various types of cancer; and surgical tools. Each area supplies roughly a quarter of Bard’s total revenue. This broad product line cuts Bard’s reliance on any one product. Most of Bard’s products are also single-use devices, which hospitals and other customers must constantly replace. In the three months ended March 31, 2006, Bard’s earnings slipped to $81.1 million from $81.3 million a year earlier. Per-share earnings crept up to $0.76 from $0.75, because it had fewer shares outstanding....

INVACARE CORP. $31 (New York symbol IVC; WSSF Rating: Average) makes wheelchairs and other medical mobility aids. It sells its products through over 25,000 home health care and medical equipment distributors in the United States, Australia, Canada, Europe and New Zealand. The company also sells to government health agencies, including the Medicare and Medicaid programs. However, government cutbacks have hurt Invacare’s sales in the past two years, particularly for more expensive items such as power wheelchairs and oxygen equipment. Rising steel, energy and other costs have also squeezed its profit margins. Consequently, Invacare is taking steps to cut its costs, including shifting about half of its manufacturing operations to Asia over the next three to five years. This plan will cost Invacare $42 million (pre-tax). But it will ultimately cut the company’s annual pre-tax costs by $30 million. Making more of its products in Asia will also make it easier for Invacare to expand its market share in that region....

WAL-MART STORES, INC. $46 (New York symbol WMT; WSSF Rating: Above average) is the world’s largest retailer, with roughly 6,100 discount department stores in the United States, Canada, Latin America, Europe and Asia. Despite its worldwide presence, Wal-Mart still generates 80% of its sales and 85% of its profits in the United States. It has a great growth record and plenty of long-term growth potential, here and overseas. Yet it trades below the market’s average p/e ratio, now around 18.7 on the Standard & Poor’s 500. The company’s sales rose from $217.8 billion in 2002 (fiscal years end January 31) to $312.4 billion in 2006. Profits rose from $1.50 a share (total $6.7 billion) in 2002 to $2.68 a share ($11.2 billion) in 2006....

H&R BLOCK INC. $22 (New York symbol HRB; WSSF Rating: Above average) has attracted several class-action lawsuits in the past few years, mostly related to products and services it sells to its tax-preparation clients. It recently agreed to pay $62.5 million to settle four lawsuits that accused it of hiding the true interest rate on loans made to customers waiting for income tax refunds. Now it’s fighting charges that fees on a retirement savings plan account it offers exceed interest payments. However, H&R Block says that only happens to customers who make the minimum deposit, and not for those who use this account as intended, to build long-term retirement savings. The State of New York now wants H&R Block to refund about $360 million to these customers, and pay $250 million in fines. To put that in context, it earned $28.9 million or $0.09 a share in its third fiscal quarter ended January 31, 2006. These results included a $31.7 million or $0.10 a share charge for lawsuits....

SHERWIN-WILLIAMS INC. $51 (New York symbol SHW; WSSF Rating: Above average) got as high as $54 in February 2006, but dropped to $37 after a Rhode Island court ruled that the company and two other paint makers are liable for harm caused by lead-based paints. Sherwin stopped making lead paint over 30 years ago, but it and the two other companies could conceivably have to spend over $1 billion to clean up about 250,000 homes in Rhode Island alone. That’s a sizable expense considering that Sherwin earned $463.3 million or $3.28 a share in 2005. However, the court exempted Sherwin from punitive damages. That helped the stock recapture much of the big drop. The stock also got a boost from Sherwin’s improving earnings, which will probably rise to $3.85 a share in 2006. It now trades at just 13.2 times that estimate. The improving earnings also let the company raise its quarterly dividend 22.0%, from $0.205 a share to $0.25. The new annual rate of $1.00 yields 2.0%. The Rhode Island decision may encourage lead-paint lawsuits in other states, which adds to Sherwin’s risk. However, the paint industry has won over 40 of these cases in the past 20 years, so there is a good chance that Sherwin’s appeal could succeed....

MICROSOFT CORP. $27 (Nasdaq symbol MSFT; WSSF Rating: Above average) is the world’s largest software company. Its main products are the Windows operating system, which runs roughly 80% of the world’s computers, and the Office suite of business programs. In the past few years, Microsoft has tried to cut its reliance on software, particularly in the face of free alternatives such as the Linux operating system. In 2001, it launched the first Xbox video game player. Last year, Microsoft started selling an upgraded version called Xbox 360. Despite strong demand for the new machine, Microsoft is still losing money on each unit. However, the company feels that licensing fees from game makers and revenues from online game players will eventually offset the Xbox’s development and manufacturing costs. The company also hopes to sell Xbox owners other entertainment services, such as music and video downloads....

SYMANTEC CORP. $16 (Nasdaq symbol SYMC; WSSF Rating: Average) makes software that helps guard computers from viruses and electronic attacks. Its best-known product is Norton Anti-Virus, the world’s top selling anti-virus program. In the past few years, Symantec has aggressively expanded its corporate services operations. Selling a variety of programs to businesses gives it steadier revenue streams than consumer software sales. As part of this strategy, Symantec recently paid $11 billion in stock for Veritas Software Corp., which specializes in data storage products for businesses. That’s huge considering that Symantec earned just $0.26 a share (total $282.4 million) on revenue of $1.25 billion in its third fiscal quarter ended December 31, 2005. These figures exclude merger expenses and other one-time costs. The company spends 15% of its sales of $3.50 a share on research, so it’s more profitable than it appears....

ADOBE SYSTEMS INC. $36 (Nasdaq symbol ADBE; WSSF Rating: Average) makes software that helps users create electronic documents. Its main product is Acrobat, which let users convert documents to the popular PDF format. In December 2005, Adobe merged with Macromedia Inc. in an all-stock transaction valued at $3.4 billion. Macromedia’s main product is Flash, which lets Internet web page creators add animation and other features that make their sites easier to use. Like Acrobat, Flash is an industry standard. In Adobe’s first fiscal quarter ended March 3, 2006, it earned $0.32 a share (total $197.5 million) before restructuring and other unusual costs, up 23.1% from $0.26 a share ($133.8 million) a year earlier. Revenue grew 38.6%, to $655.5 million from $472.9 million....

AUTODESK INC. $38 (Nasdaq symbol ADSK; WSSF Rating: Average) makes AutoCAD, the world’s top selling computer aided design program. About 4 million architects and engineers in over 100 countries use it to design and test new buildings and products. This business supplies nearly 90% of its revenue. The remainder comes from programs that filmmakers use to create special effects. In its fourth fiscal quarter ended January 31, 2006, Autodesk earned $0.33 a share (total $83.0 million), up 26.9% from $0.26 a share ($65.8 million) a year earlier. If you disregard restructuring costs and other unusual items, per-share earnings grew 23.3%, to $0.37 from $0.30. Revenue grew 17.0%, to $416.8 million from $356.2 million. Much of Autodesk’s recent success is due to its decision to sell its products on a subscription basis. That gives it steadier revenue streams than selling its products as a one-time purchase. This move has also made it easier for Autodesk to phase out support for older versions of its programs, which gives users an incentive to upgrade every year or two....