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

FEATURED PRO: Peter Arender is vice-president and portfolio manager of Toronto-based Acker Finley Asset Management (www.ackerfinley.com). Acker Finley manages the QSA series of funds.

Fund Form: The QSA Canada Focus Fund has a one-year return of 10.1 per cent, compared to the group average of 21.9 per cent, and the U.S. Large Cap Value 50 Fund has a six-month return of 6.3 per cent, compared to the group average of 4.8 per cent.

Management Expense Ratios: Canadian Equity, 3.5 per cent; U.S. Large Cap, 2.8 per cent.

Arender’s Perspective: “It’s probably easier to find value in the market now than back in April because a lot of stocks have declined. I guess the trick now is for the stocks that are declining to stop declining. Although it is easier to find good stocks now than it was earlier in the year, it’s still not a no-brainer.

“I think investors have to be very, very careful about which individual stocks they buy and realize that the overall market may not do much over the next couple of years. I think the way investors are going to get some gains is by looking at individual situations where the valuations have become really compelling.

“We’re not concerned about a market crash necessarily. We don’t think the market has valuations where investors have to be especially on guard. The economy could slow down a bit and investors need to realize that all is not roses – but it’s not that bad, either. The stocks we’re featuring seem to offer better risk/reward potential than the overall market.”

FIRST STAR
* Noranda (NRD-TSX)
* Recent Price: $22.85.
* 52-Week Range: $12.25-$24.99.
* Arender’s 12-Month Target: $31.
* Snapshot: Noranda is a mining company that ranks among the world leaders in production of zinc and nickel. It is also a significant producer of copper, aluminum, lead, silver, gold, sulphuric acid and cobalt. The company recycles secondary copper, nickel and precious metals.
* CEO: Derek Pannell.
* Head Office: Toronto.
* Vital Stats: Current Price/Earnings Ratio, 26.1; Revenue (last 12 mos), $7 billion; 5-Yr Revenue Growth, -0.4 per cent; Earnings (last 12 mos), $295 million; Market Cap, $6.73 billion; Shares Outstanding, 296.3 million; Dividend Yield, two per cent.
* Arender’s View: “Noranda’s stock has been moving sideways for most of this year, flat-lining in the low $20s even as the fundamentals and intrinsic value have been increasing fairly dramatically. That’s exactly what we like to see.
“We’re still seeing good underlying demand for the mining and metals products they sell and we expect their current level of earnings to at least be sustained or maybe even increase. Even if we assume that they’re going to continue earning what they’re earning now, I think you’ve got a stock that has a target of at least $30. We also believe that if we have a global economic recovery, particularly out of China, there will be demand for basic materials that benefit companies like Noranda.”
* Arender’s Risk Rating: Medium.
* Web Watch: www.noranda.com

SECOND STAR
* Wendy’s International (WEN-NYSE)
* Recent Price: $35.78 US.
* 52-Week Range: $27.37-$42.75.
* Arender’s 12-Month Target: $45.
* Snapshot: Wendy’s operates an international franchise system of quick-service restaurants, including 6,481 Wendy’s restaurants and 2,527 Tim Hortons outlets.
* CEO: John Schuessler.
* Head Office: Dublin, OH.
* Vital Stats (U.S. dollars): Current Price/Earnings Ratio, 16.8; Revenue (last 12 mos), $3.3 billion; 5-Yr Revenue Growth, 9.8 per cent; Earnings (last 12 mos), $244.9 million; 5-Yr Earnings Growth, 13.4 per cent; Market Cap, $4.08 billion; Shares Outstanding, 114.08 million; Dividend Yield, 1.3 per cent.
* Arender’s View: “The fundamentals of Wendy’s continue to increase and the earnings continue to show improvement and yet the stock has been declining quite rapidly. That opens a bit of a value gap for us. Even on a fairly conservative assumption of growth, I believe there’s a nice buffer in this company. McDonald’s (restaurants) also screens fairly well for us, but I slightly prefer Wendy’s.”
* Arender’s Risk Rating: Medium.
* Web Watch: www.wendys.com

THIRD STAR
* Big Lots (BLI-NYSE)
* Recent Price: $12.80 US
* 52-Week Range: $12.44-$18.39.
* Arender’s 12-Month Target: $18.
* Snapshot: Big Lots is a broad-line close-out retailer operating 1,380 stores, focusing on close-out merchandise and toys.
* CEO: Michael Potter.
* Head Office: Columbus, OH.
* Vital Stats (U.S. dollars): Current Price/Earnings Ratio, 16.9; Revenue (last 12 mos), $4.2 billion; 5-Yr Revenue Growth, -1.2 per cent; Earnings (last 12 mos), $77.7 million; Market Cap, $1.47 billion; Shares Outstanding, 115.2 million.
* Arender’s View: “The fundamentals have been gradually improving all year while the stock has been declining, so it has reached a level where it looks like it will bottom out right around $12.50 US. From that level, we see upside somewhere into the high teens. We don’t need this company to start growing its earnings dramatically.
"Let’s just assume the stock just keeps earning what it’s earning now. In that case, the gradual ebb and flow of the stock price movement should get it into the high teens.”
* Arender’s Risk Rating: Medium.
* Web Watch: www.biglots.com Arender’s Edge Record:
-0.8 per cent. Best Pick: Esprit Exploration (EEE-TSX) +28.9 per cent. Worst Pick: King Pharmaceuticals (KG-NYSE) -33.9 per cent.

Disclosure: Arender holds positions in the funds in which the featured stocks are held. Noranda is held in the QSA Canada Focus Fund while Wendy’s and Big Lots are held in the QSA U.S. Large Cap Fund.

(Gyle Konotopetz can be reached at gyle@businessedge.ca)