(Every week, Business Edge columnist Gyle Konotopetz profiles the top three stock picks of one of Canada’s most successful investment pros.)

FEATURED PRO: Josef Schachter is president of Calgary-based Schachter Asset Management.

Schachter’s Perspective: “The second quarter will be the turnaround quarter for the market. I think we’ll see the S&P/TSX (index) over 8300 (recently at 7596) by the end of a summer rally and I think the Dow will get to 11000 this year (recently at 9939). After the lull in profitability that we’ve seen in the first quarter, the second quarter should be better and the third quarter should show a big increase in earnings for American (stocks). I think some time in the next month or so, we’ll come out of the gate and there will be some significant upside.We’re almost at a maximum level of pessimism and that’s creating a good bottom.”

FIRST STAR



* Equatorial Energy (OZ-TSX)

* Recent Price: $2.05.

* 12-Month Range: $1.55-$3.95.

* 12-Month Target: $3.75.

* Snapshot: Equatorial is an exploration and development company with petroleum and natural gas interests in Western Canada and Indonesia.

* CEO: John Rooney.

* Head Office: Calgary.

* Vital Stats: Revenue (last 12 mos), $136.2 million; Profit/Loss (last 12 mos), $8.4 million loss; Market Cap, $68 million; Shares Outstanding, 30.2 million.

* Schachter’s Comment: “There is a lot of upside potential here for their natural gas in Canada and their oil in Indonesia. I think they’ll trade at $3.75 during 2002.”

* Risk Rating: Medium.


SECOND STAR

* Nortel Networks (NT-TSX)

* Recent Price: $4.24.

* 12-Month Range: $4.12-$24.25.

* 12-Month Target: $12.

* Snapshot: Nortel is an Internet, communications and fibre-optics company for service providers and enterprises spanning wireless networks and metro networks.

* CEO: Frank Dunn.

* Head Office: Brampton, Ont. (52,600 employees).

* Vital Stats: Revenue (last 12 mos), $27.9 billion; 5-Yr Revenue Growth, 14.1%; Profit/Loss (last 12 mos), $43.5 billion loss; Market Cap, $15.3 billion; Shares Outstanding, 3.2 billion.

* Schachter’s Comment: “I think that when the economy improves, tech (stocks) will take off and Nortel’s been so devastated that when it turns, it won’t be a 10-per-cent rally. It’ll be a hell of a rally. I think that will happen before the end of the year. You’re already beginning to see the telcos (telecommunications companies) raising their rates to get more revenue in the door. I think by fourth quarter this year or by second or third quarter next year, Nortel should start generating some reasonable numbers.”

* Risk Rating: High.

THIRD STAR

* Ventus Energy (VTU-TSX)

* Recent Price: $3.80.

* 12-Month Range: $2.45-$11.65.

* 12-Month Target: $6.

* Snapshot: Ventus Energy is an exploration and development company focused on natural gas properties.

* CEO: Ron McIntosh.

* Head Office: Calgary.

* Vital Stats: Revenue (last 12 mos), $106.9 million; 5-Yr Revenue Growth, 233.6%; Profit/Loss (last 12 mos), $80.7 million loss; Market Cap, $110.8 million; Shares Outstanding, 32.5 million.

* Schachter’s Comment: “The company has had some issues of reserve evaluations, but it is now under new management. Under the new management, the company has rationalized the assets, they’ve taken their writedowns and they have very conservative reserve reports now. I think the company could do a $1.15 to $1.20 in (per-share) cash flow and maybe $1.50 next year and, if they do, I believe it’s a $6 stock.”

* Risk Rating: Medium

* Schachter’s Record (with Jan. 3 picks): -7% (Equatorial +14%, Halliburton +22%, Nortel -58%). Schachter is no longer recommending Halliburton as a buy.

* Disclosure: Schachter says all three stocks are held in his company’s corporate account.