Praxair ( PX) produces, sells and distributes industrial gases. It has been rated a buy since November 2005. The buy rating is supported by the company's robust revenue growth, expanding profit margins, increased net income and notable return on equity.

Third-quarter profit climbed 23% to $305 million, or 94 cents a share, while revenue increased 13% to $2.37 billion. The company's Asian and South American segments grew the most, supported by new business and project start-ups, while North America saw continued stable growth. Higher sales, improved pricing, cost efficiency and productivity programs helped the gross profit margin to grow by 121 basis points to 41.23%.

Risks to the company's performance include increase in the leverage level to 0.82 from 0.71, led by a 26.1% surge in total debt and the unfavorable effect of currency fluctuations.

L-3 Communications Holdings ( LLL), a military-equipment company, has been rated a buy since October 2005. Third-quarter net income rose 21% over a year ago. Revenue increased by 11.1% during the same period, outpacing the industry average of 8.5%.

L-3's earnings per share grew by 19.1% and the company's stable EPS growth over the past year indicates that it has sound management over its earnings and share float. Its net operating cash flow rose 24.41% to $324.10 million during the third quarter compared with the same period last year.

L-3 Communications said it expects 2008 earnings to be within the range of Wall Street's expectations. Though the company's stock price rose by 36.16% in the 12 months prior to Nov. 1, it should continue to move higher.

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