(FORTUNE Magazine) – BAUSCH & LOMB When Daniel Gill became CEO of this manufacturer of eyeglasses and other optical equipment nine years ago, he embarked on a strategy that made him appear myopic. Nowadays, he seems to have 20-20 vision. In the first five years of his tenure, Gill sold off roughly half the company's traditional businesses, including the one that made lenses for prescription eyeglasses. The question heard around Rochester, New York, the company's hometown, was: Can Gill build companies, or only dismantle them? Recalls Gill, 53: ''It was a time when massive divestiture was not common, so the world was not kind to me.'' These days he is looking very much the builder. Bausch & Lomb is moving into a wide range of consumer health products that share a central theme: They usually command a premium price when doctors, dentists, ophthalmologists, and the like recommend them. For example, many dentists are fans of Bausch & Lomb's Interplak, a $70 electric toothbrush that the company claims is especially effective at removing plaque. It sold 1.6 million in the U.S. last year, 56% of them on dentists' recommendations. Meanwhile dentists are buying Interprobe, a computerized tool that provides a printout showing the extent of gum diseases like gingivitis. The company also sells a hearing aid with a soft ear insert designed for greater comfort. Bausch & Lomb remains the largest producer of contact lenses. Although margins in this business have been squeezed by tough competition, it remains profitable. So, too, are the company's lens-cleaning solutions and a new line of drugs for eye infections. Sunglasses, the old standby, still account for much of Bausch & Lomb's strength. Sales have expanded by 30% a year for the past four years, helped by the continuing popularity of the Ray-Ban line. The company has also introduced new brands, including one named for Donna Karan, a designer of women's clothing. Since 1984, Bausch & Lomb's revenues have grown from $534 million to $1.2 billion a year, and profits from $50 million to $114 million. Shares were selling recently for $59.50, or 14 times 1990's projected earnings.

TECHNICAL COMMUNICATIONS Shhh. Can you keep a secret? Technical Communications of Concord, Massachusetts, makes equipment that encrypts phone calls, fax transmissions, and other electronic messages and then unscrambles them at the receiving end. Earnings rose 30% to $2 million last year on revenues of $13.4 million. The company says most of its customers are foreign governments -- which it won't identify. It says one recently placed a $7 million order. Still, Arnold McCalmont, the president and founder, thinks the U.S. market is ''potentially explosive'' because of the proliferation of cellular telephones and satellite and microwave communications, whose transmissions travel by radio wave and are easily intercepted. AT&T and Motorola, among other companies, make similar equipment. But Technical Communications has a market edge: It offers its customers a choice of scrambling systems. The company has an order backlog of $11.5 million, about twice last year's. Shares were selling recently for $12, ten times 1990's estimated earnings.

ARBOR DRUGS While many drugstores experiment with selling auto parts and renting videotapes, the prescription for success at this chain in Troy, Michigan, has been to concentrate on its pharmaceutical business. The company says this builds repeat customers because people like to buy medications in stores that have a professional atmosphere. Since 1982, drug sales have risen from 22% of revenues to 39%. Each of the 95 stores is identical, and each has two managers -- one for the store and one for the pharmacy -- which means the pharmacist doesn't have to take time out to stock shelves with deodorant or sell lottery tickets. CEO and company founder Eugene Applebaum plans to increase the number of stores to 150 by 1995. Last year Arbor stores had average sales of $380 per square foot, 62% higher than the industry's average. Earnings have risen an average of 38% compounded for each of the past five years on a 26% annual increase in sales. Shares sold recently for $19 each, 16 times estimated earnings for 1990.

ENCORE COMPUTER Kenneth Fisher, who helped build Prime Computer into a major manufacturer of hardware in the 1970s, founded Encore in 1983 to pioneer parallel processing. This technology enables many microprocessors to operate in unison to achieve the data crunching speed and power usually associated with more expensive mainframes. But after Encore developed its Multimax minicomputers, which can use parallel processing, the computer industry slumped. The company struggled to overcome its image as a startup that might not be around to service the machines it made. In 1988, Encore made just $1.9 million on sales of $34.4 million. Early in 1989, the company acquired Gould Inc.'s computer systems division and its customers, which pushed sales to $222 million last year. Even so, Encore lost more than $29 million for the year. Morgan Keegan analyst Ramkrishna Kasargod describes the stock as ''speculative.'' But the recent $2- a-share price, about six times his estimate for 1990 earnings, might make the Fort Lauderdale, Florida, company a good buy.