(Business Edge columnist Gyle Konotopetz regularly profiles the top three stock picks of some of Canada’s most accomplished investment pros).

FEATURED PRO: Deb Abbey is president and portfolio manager of Real Assets Investment Management (www.realassets.ca). The Vancouver-based firm was the first investment management company in Canada to focus exclusively on social investing.

Fund Form: The Real Assets Social Leaders Fund has a one-year return of 4.3 per cent and the Real Assets Social Impact Balanced Class A Fund has a one-year return of 5.5 per cent.

Management Expense Ratios: Social Leaders, three per cent; Social Impact, 2.5 per cent.

Deb Abbey

Abbey’s Perspective: “Global macro conditions appear to be stable and slightly accommodative, but an extended period of high oil prices would negatively affect consumer confidence and disposable income, with the potential to slow global demand – but not to the same extent that high oil prices impacted the 1970s and 1980s.

“There is potential for the U.S. dollar to depreciate another 20 per cent (versus the Canadian dollar) from current levels. An appreciating Canadian dollar will help mitigate rising inflation and reduce the Bank of Canada’s need to raise interest rates. I believe interest rates will continue to rise, but at a slower pace than was previously anticipated.

“Companies that pay dividends are becoming more attractive from a valuation perspective.”

FIRST STAR
* Puget Energy (NYSE:PSD)
* Recent Price: $23.35 US.
* 52-Week Range: $20.51-$23.99.
* Snapshot: Puget delivers electricity and natural gas to 1.2 million customers in Washington state.
* CEO: Stephen Reynolds.
* Head Office: Bellevue, Wash.
* Vital Stats (in U.S. dollars): Current Price/ Earnings Ratio, 20.17; Revenue (last 12 mos), $2.5 billion; 5-Yr Revenue Growth, 0.6 per cent; Earnings (last 12 mos), $114.1 million; 5-Yr Earnings Growth, -13.2 per cent; Market Cap, $2.32 billion; Shares Outstanding, 99.49 million; Dividend Yield, 4.3 per cent.
* Abbey’s View: “While everyone else in the electric utility industry got sucked into the myth of electric power deregulation and ever bigger profits in the wholesale markets, Puget Energy focused on maintaining and growing their customer base by providing reliable service and meeting their customers’ needs. In the heady days of swashbuckling utility pirates, like Enron, it took real leadership to stay the traditional course.
“As a result, Puget emerged from the chaos of the electric utility deregulation relatively unscathed and is now building strength in energy conservation and renewable energy development. Puget has a target of meeting 10 per cent of their customers’ energy needs through energy conservation over the next decade. We expect the company to show steady growth over the long term.”
* Abbey’s Risk Rating: Low.
* Web Watch: www.pse.com

SECOND STAR
* The Timberland Co. (NYSE:TBL)
* Recent Price: $61.40 US.
* 52-Week Range: $48.70-$67.50.
* Snapshot: Timberland designs, licenses and markets footwear, apparel and accessories under the Timberland label.
* CEO: Jeffrey Swartz.
* Head Office: Stratham, N.H.
* Vital Stats (U.S. dollars): Current Price/Earnings Ratio, 15.2; Revenue (last 12 mos), $1.5 billion; 5-Yr Revenue Growth, 8.7 per cent; Earnings (last 12 mos), $147.1 million; 5-Yr Earnings Growth, 14.3 per cent; Market Cap, $2.17 billion; Shares Outstanding, 35.28 million.
* Abbey’s View: “Timberland has responded to industry challenges with one of the best codes of conduct and factory monitoring programs in the world. The company is actively empowering workers in China by partnering with Verité, an organization that does independent monitoring of factories as well as education and training, to provide life-skills training. Timberland’s management excels in balancing both the social and financial requirements of its stakeholders.
“The company is currently debt-free with approximately $6.90 (US) of cash per share and generated $4.91 of free cash flow per share in 2003.
“This cash has provided management with a source of capital to finance business expansion while providing shareholders with a 31-per-cent return on equity over the past five years.”
* Abbey’s Risk Rating: Medium.
* Web Watch: www.timberland.com

THIRD STAR
* Stuart Energy Systems (TSX:HHO)
* Recent Price: $3.11.
* 52-Week Range: $2.14-$4.02.
* Snapshot: Stuart Energy has been producing pure hydrogen for more than 50 years and has developed the hydrogen energy station for fuelling industrial processes, vehicles and power supplies.
* CEO: Jon Slangerup.
* Head Office: Mississauga, Ont.
* Vital Stats: Revenue (last 12 mos), $20.5 million; Earnings/Loss (last 12 mos), $37.4 million Loss; Market Cap, $112.75 million; Shares Outstanding, 36.25 million.
* Abbey’s View: “As a global leader in the development of hydrogen infrastructure, Stuart Energy is well positioned to provide fuel for clean-energy solutions that reduce air pollution and global climate change. With oil prices in the $50 (US) per barrel range and high probability they will average at least $40 in 2005, there has been renewed interest in alternative fuel technologies to provide low-cost, renewable and environmentally friendly fuel sources.
“The company ended the second quarter (through June) with a sales backlog of $15.1 million. As sales ramp up, Stuart Energy is expecting gross margins of at least 10 per cent, to reduce cash burn by at least 30 per cent in 2005 and become cash-flow positive by late 2006.”
* Abbey’s Risk Rating: High.
* Web Watch: www.stuartenergy.com

Abbey’s Edge Record: -3.3 per cent. Best Pick: United Natural Foods (Nasdaq:UNFI) +38.6 per cent. Worst Pick: Wainwright Bank & Trust (Nasdaq:WAIN) -23.3 per cent.

Disclosure: The featured stocks are held in the Social Leaders Fund and Abbey owns shares in Real Assets funds.