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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....

WENDY’S INTERNATIONAL, INC. $62 (New York symbol WEN; WSSF Rating: Above average) is the third-largest hamburger chain in the world, behind McDonald’s and Burger King. In 1995, it acquired coffee and donut chain TIM HORTONS INC. $27 (New York symbol THI; WSSF Rating: Extra risk). Tim Hortons is Canada’s largest fast-food chain, with 2,597 outlets. This includes 681 smaller restaurants in non-traditional locations such as gas station convenience stores, universities, hospitals and office buildings. Tim Hortons now has about 23% of the Canadian fast-food market (compared to 18% for McDonald’s). It also has 76% of the coffee and baked goods segment. It plans to expand by at least 1,000 new locations in the next few years....

CANADIAN UTILITIES LTD. $39 (Toronto symbol CU.NV; SI Rating: Above average) supplies electricity and natural gas to over 1 million customers, primarily in Alberta. It also invests in overseas gas and electricity assets. In the three months ended December 31, 2005, earnings fell to $0.69 a share from $0.71 a year earlier, mostly due to higher gas franchise fees paid to municipalities. Higher electricity rates helped push revenue up 6.8%, to $680.3 million from $637.0 million. The company generated cash flow of $5.17 a share in 2005, up 22.2% from $4.23 in 2004. However, that failed to fully cover its capital costs of $4.13 a share, and its $1.10 dividend....

TRANSALTA CORP. $23 (Toronto symbol TA; SI Rating: Average) operates 51 power plants in Canada, the U.S., Mexico and Australia. It also owns 50% of a major Canadian wind farm operator. In the past few years, the company has sold its regulated operations to focus solely on its nonregulated plants. However, it sells roughly 90% of its power under long-term, firm-price contracts or directly to specific customers such as carmakers and hospitals, which helps cut its exposure to sometimes volatile electricity prices. It also uses hedges to shield itself from rising fuel costs....

EMERA INC. $20 (Toronto symbol EMA; SI Rating: Average) supplies roughly 95% of Nova Scotia’s electricity needs. This business accounts for over 80% of its income. It also owns the main electrical utility in Bangor, Maine, and holds interests in other power-related projects. In the three months ended December 31, 2005, Emera earned $0.34 a share from continuing operations, up 25.9% from $0.27 a year earlier. The savings from a new natural gas supply deal helped offset higher oil and coal costs. Revenue rose 3.7%, to $297.1 million from $286.5 million. Nova Scotia regulators let the company raise its power rates by 5.3% in 2005. Emera is now asking for a 13% hike in 2006, to cover its higher fuel costs. However, regulators will probably reject this request and approve a smaller rate hike....

FORTIS INC. $23 (Toronto symbol FTS; SI Rating: Above average) operates regulated and non-regulated power systems in Canada, the United States, Belize and the Cayman Islands. It also owns hotels and commercial real estate properties, mainly in Atlantic Canada. In 2004, the company paid $1.5 billion in cash and stock for regulated electrical utilities in Alberta and British Columbia. This helped cut Fortis’s income from its power operations in Atlantic Canada, from 50% of earnings to 30% in 2005. However, Fortis’s earnings in the fourth quarter of 2005 only crept up to $22.3 million from $21.2 million a year earlier. That’s mainly because a settlement with Alberta regulators cut the Alberta subsidiary’s earnings in the latest quarter by $3 million. Per-share earnings remained unchanged at $0.21, while revenue grew 4.7%, to $353.1 million from $337.2 million....

INCO LTD. $54 (Toronto symbol N) struggled as the Asian economic crisis led to lower nickel demand and prices. In light of the bleak outlook, it seemed that Inco overpaid for the huge Voisey’s Bay nickel deposit in Labrador. The Newfoundland government’s demand that Inco build a smelter in the province to process the ore also threatened the project’s feasibility. The high cost of the Voisey’s Bay purchase also forced Inco to quit paying dividends. But spreading prosperity around the world has spurred nickel demand and prices. That helped make it economical for Inco to build a smelter in Newfoundland. Voisey’s Bay began operations in 2005....

SOBEYS INC. $38 (Toronto symbol SBY; SI Rating: Average) is Canada’s second-largest food seller, with 1,300 stores under the Sobeys, IGA and Price Chopper banners. The company owns roughly a third of its stores; franchisees own the remaining two-thirds. The Sobey family controls 68% of the company’s stock. Like Loblaw, Sobeys used non-food items and in-store services such as pharmacies and bakeries to drive its growth. Sales rose from $9.2 billion in 2001 (fiscal years end April 30) to $12.2 billion in 2005. Earnings before unusual items grew from $1.50 a share (total $91.2 million) in 2001 to $2.85 a share ($186.7 million) in 2005. Also like Loblaw, Sobeys has invested heavily in new stores, and developed its own private label brand (“Compliments”). It’s also streamlining its distribution network by closing some facilities and expanding others....

LOBLAW COMPANIES LTD. $58 (Toronto symbol L; SI Rating: Above average) is Canada’s largest supermarket operator, with over 1,600 company-owned and franchised stores. The company also distributes food and other goods to independent retailers. George Weston Ltd. owns 63% of the company. Loblaw’s revenue grew from $21.5 billion in 2001 to $26.2 billion in 2004, as the company expanded the amount of non-food items in its stores, such as clothing and housewares. It also offered more services like dry cleaning. These moves also fueled its profit growth, from $2.04 a share (total $563 million) in 2001 to $3.48 a share ($968 million) in 2004. In 2005, Loblaw launched a new strategy aimed at protecting its market share, and keeping its costs low. The main thrust of this plan is an overhaul of its warehouse distribution network, including closing six of its 32 distribution centres....

MANULIFE FINANCIAL $73 (Toronto symbol MFC; SI Rating: Above-average) sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide. Manulife has assets under administration of $372.3 billion. Manulife acquired New York-listed John Hancock Financial Services in 2003 for $15 billion in shares. The merger was one of the largest ever in the life insurance industry, but the integration has gone smoothly. John Hancock continues to add to Manulife’s sales and profits in the U.S. In the three months ended December 31, 2005, Manulife’s earnings rose 18.3%, to $900 million or $1.14 a share, from $761 million or $0.93 a share a year earlier. Revenue rose 3.6%, to $8.20 billion from $7.92 billion. The shares yield 1.9%....

GREAT-WEST LIFECO $29 (Toronto symbol GWO; SI Rating: Above-average) is a leading Canadian insurance company, with $177.3 billion in assets under administration. The company also provides wealth management and other financial services. It also operates in the U.S. and Europe. Power Corp. of Canada controls about 75% of the company’s common stock. Great-West’s earnings in the three months ended December 31, 2005 rose 10.3%, to $469 million or $0.53 a share from $423 million or $0.48. Revenues rose 13.6%, to $6.52 billion from $5.74 billion. Earnings growth came from the company’s Canadian and European operations. Canada accounts for 38% of total revenues. Canadian earnings in the latest quarter rose 16.7%. European revenues comprise 45% of the total. Earnings in that region rose 9.9%....

GAMESTOP CORP. (New York symbols GME $41 and GME.B $37; WSSF Rating: Extra risk) operates over 4,400 stores in the United States and Europe that sell video game players and software. It also publishes a video game magazine. In October 2005, GameStop paid $1.44 billion (70% in cash and 30% in stock) for rival video game retailer Electronics Boutique. That’s a huge investment for the company, which earned $1.17 a share (total $67.7 million) in the fiscal year ended January 31, 2005. Thanks to the takeover, GameStop’s sales in the nine weeks ended December 31, 2005 rose 133% to $1.35 billion. However, if you assume that GameStop acquired Electronics Boutique a year earlier, pro forma same-store sales fell 1.5% due to shortages of Microsoft’s new Xbox 360 video game console....

BARNES & NOBLE INC. $43 (New York symbol BKS; WSSF Rating: Average) is the world’s largest bookseller, with 824 bookstores in 50 states. It also sells books and other products over the Internet. In November 2004, the company handed out its 63% stake in video game retailer GameStop Corp. to its own stockholders as a special dividend. The spin-off hurt Barnes & Noble’s short-term prospects. But it also let it focus on improving profitability at its less-risky book selling business. In the nine weeks ended December 31, 2005, sales at its Barnes & Noble superstores rose 5.2% to $1.1 billion from a year earlier. Same-store sales grew 2.3%. However, sales at its B. Dalton mall-based stores fell 18.4% to $41.3 million as the company continued to close unprofitable outlets. On a same-store basis, sales at this division grew 3.0%. Sales at the online operation rose 1.0%, to $106.1 million....

AMERIPRISE FINANCIAL INC. $45 (New York symbol AMP; WSSF Rating: Average) provides wealth management, brokerage and insurance services through a nationwide network of over 12,000 advisors. It currently owns, manages or administers assets worth $428.1 billion. In the three months ended December 31, 2005, Ameriprise’s income from continuing operations fell 52.2%, to $0.44 a share (total $111 million) from $0.92 a share ($226 million) a year earlier. If you disregard costs related to the separation from American Express and other one-time items, per-share profits fell 6.1%, to $0.77 from $0.82. Revenue crept up to $1.87 billion from $1.84 billion. However, excluding discontinued operations, revenue grew 5%. The company prefers to focus on wealthier individuals to whom it can market a variety of financial products. In the most recent quarter, 44% of the company’s clients paid fees to subscribe to an Ameriprise financial management plan, up from 42% a year earlier. These long-term plans give Ameriprise steadier revenue streams than one-time sales of insurance or other financial products....

AMERICAN EXPRESS CO. $55 (New York symbol AXP; WSSF Rating: Average) is one of the world’s largest financial services providers, with operations in over 130 countries. Its well-known credit card business accounts for roughly 90% of its revenue. The remaining 10% comes from its travel services business. In September 2005, Amex handed out all of its shares in subsidiary American Express Financial Advisors (now called Ameriprise Financial Inc.) to its stockholders as a tax-deferred dividend. As part of the spin-off, it restructured its remaining operations. These moves cut its pre-tax profits in the three months ended December 31, 2005 by $65 million. However, it also received a $60 million gain from a tax settlement. To put these figures in context, Amex earned $0.60 a share (total $751 million) from continuing operations in the fourth quarter of 2005, up 13.2% from $0.53 a share ($669 million) a year earlier. Revenue grew 8.5%, to $6.4 billion from $5.9 billion....

FREESCALE SEMICONDUCTOR INC. (New York symbols FSL $27 and FSL.B $27; WSSF Rating: Extra risk) makes chips for a wide variety of products such as automobiles, computer networking equipment and wireless communication equipment. Motorola accounts for 30% of its total sales. In the past few months, Freescale has done a good job of cutting its costs. That helps explain why its profit in the fourth quarter of 2005 jumped to $0.45 a share (total $192 million) from $0.01 a share ($5 million) a year earlier. The latest quarterly results included an $8 million reversal of a previous writedown, while the 2004 fourth quarter included $84 million in one-time charges related to the spin-off from Motorola. Revenue rose 3.5%, to $1.48 billion from $1.43 billion. Like most technology companies, Freescale spends heavily on research, typically around 20% of its revenue of $13.80 a share....

MOTOROLA INC. $22 (New York symbol MOT; WSSF Rating: Above average) is the world’s second-largest maker of mobile phones, after Nokia Corp. This business supplies about 55% of Motorola’s revenue. The company also supplies infrastructure equipment to wireless phone companies, and makes other communications gear such as two-way radios and high-speed Internet modems. In December 2004, Motorola handed out its remaining 68% stake in chip maker Freescale Semiconductor to its investors, as part of a broader restructuring. In the three months ended December 31, 2005, Motorola earned $0.47 a share from continuing operations, up 67.9% from $0.28 a share a year earlier. If you exclude unusual items, the company would have earned $0.35 a share in the most recent quarter. Revenue rose 18.2%, to $10.4 billion from $8.8 billion....

SONY CORP. $47 (New York symbol SNE; WSSF Rating: Above average) is one of the world’s largest makers of consumer electronic products such as TV sets, DVD players and stereo equipment. This business supplies two-thirds of its revenues. The remaining third comes from its PlayStation video game players, its film and TV studios, and its financial services division. In the past few years, Sony failed to anticipate the strong demand for big screen TV sets that use either plasma or LCD (liquid crystal display) technologies. That let other companies cut into its market share. Meanwhile, its famed Walkman portable music players lost market share, mainly to Apple’s iPod. Now, however, Sony is restructuring its TV business, to focus on new flat screens. This will cost roughly $900 million, but should cut way back on its operating costs, starting with a $50 million saving in fiscal 2007 (fiscal years end March 31)....

DUNDEE CORP. $33 (Toronto symbol DBC.SV.A; SI Rating: Average) holds equity interests in several businesses. Its main asset is its 63% stake in Dundee Wealth Management Inc., which sells investments, life insurance and other financial services through about 4,000 independent advisors across Canada. Through 86%-owned Dundee Realty Corp., Dundee invests in commercial and residential real estate developments in Canada and the United States. It also invests in junior resource companies. In the three months ended September 30, 2005, Dundee earned $0.24 a share (total $6.4 million), down 56.4% from $0.55 a share ($14.4 million) a year earlier. But the latest results included a $5.0 million pre-tax charge related to Dundee’s plan to upgrade the computer systems of its brokerage operations. Revenue fell 7.7%, to $205.7 million from $222.8 million, mostly due to lower revenue from its real estate division, following last year’s sale of a condominium project. Investors tend to avoid Dundee for several reasons, including its complex holding company structure and dual-class shares....

IGM FINANCIAL CORP. $46 (Toronto symbol IGM; SI Rating: Above average) sells mutual funds and other financial services through three main divisions: Investors Group, Mackenzie Financial and Investment Planning Council. IGM is currently Canada’s largest mutual fund company, with $94.1 billion in mutual fund assets under management. Power Financial Corp. owns 56% of IGM. In the third quarter of 2005, IGM earned $0.66 a share, up 13.8% from $0.58 a year earlier. Revenue grew 11.4%, to $587.0 million from $527.1 million, as improving equity markets fueled demand for mutual funds. Mutual fund sales should continue to rise in 2006, particularly during the busy RRSP season in the first two months of the year, which accounts for over half of the mutual fund industry’s annual sales....

GREAT-WEST LIFECO INC. $29 (Toronto symbol GWO; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $174.1 billion. Power Financial Corp. owns 75% of the company’s stock. In the three months ended September 30, 2005, Great-West earned $421 million, up 1.7% from $414 million a year earlier. However, per-share income remained unchanged at $0.47 a share. If you exclude a restructuring charge and extra provisions for claims related to hurricanes in the United States, the company would have earned $0.51 a share in the most recent quarter. Revenue rose 5.1%, to $5.2 billion from $4.95 billion. Most of Great-West’s recent earnings growth comes from its Canadian operations (45% of revenue), mainly due to expense reductions following the acquisition of rival insurer Canada Life Financial in 2003. So far, Great-West has cut its annual costs by $407 million. That’s 23% ahead of its original target. It should finish absorbing these operations in early 2006, and ultimately save $420 million....