STOCK PICKS: Top 5 Large-Cap for Oct. 8

Looking ahead to the remainder of fiscal 2008, management feels that Baxter is well-positioned for success in a shaky global economy. Due to its second-quarter results, Baxter raised its fiscal 2008 guidance from previous estimates. The company now anticipates sales growth of 5% to 6%, along with earnings per diluted share of $3.28 to $3.32. Previous earnings guidance was announced as $3.18 to $3.24 per diluted share. The company does show weak operating cash flow, but we believe that Baxter's strengths outweigh any weakness and that there is still good upside potential for this stock.

Charles Schwab (SCHW Quote) and its subsidiaries provide securities brokerage, banking and related financial services to individual and institutional investors. Based in San Francisco, the company's clients are primarily located in the United States, the United Kingdom and Hong Kong. Schwab employs approximately 13,400 people full-time, and it listed $1.4 trillion in client assets as of Aug. 31.

We have rated Schwab a buy since January 2005. The company has witnessed impressive growth in its top line, a sustainable bottom line and expanded operating margins despite a decline in short-term interest rates and equity market valuations.

All of the company's major segments have shown positive trends recently, such as strong revenue growth in its Investor Services, Institutional and Corporate, and Retirement Services segments during the second quarter. Net income rose 1% from $2.92 billion a year ago to $2.95 billion in the most recent quarter. Earnings per share also increased year-over-year from 20 cents to 27 cents. The company's operating margin expanded 869 basis points to 40.54%, which we see as a sign of operational efficiency.