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

FEATURED PRO: Evan Spiropoulos is chief financial officer and portfolio manager at Calgary-based Hesperian Capital Management, which manages the Norrep funds that focus primarily on small-cap stocks.

Fund Form: Norrep Fund, 2003 return of 43.9 per cent compared to the group average of 10.7 per cent (management expense ratio, 2.53 per cent); Norrep Fund II, 2003 return of 45.8 per cent compared to the group average of 33.2 per cent (MER, two per cent).

Website: www.hesperiancapital.com

Spiropoulos’s Perspective: “Generally, the market still feels a little toppy to me, particularly the tech market. We’re virtually out of the tech market because we don’t see a lot of value in about 80 per cent of the names. A lot of stocks are going up without much reason and it worries us that people are starting to fall into the same old traps of buying those stocks. Still, we believe this will be a good year overall for investors, although probably not as good as last year.

“We’re still seeing some value in consumer cyclical stocks and industrial stocks still look very good to us. We also continue to favour the metals and mining stocks, although they’re in need of a correction and we’re seeing that now.”



FIRST STAR
* Major Drilling Group (MDI-TSX)
* Recent Price: $9.50.
* 52-Week Range: $3.07-$11.25.
* Snapshot: Major Drilling is an international mineral exploration driller and also does geo-technical drilling and drill rig manufacturing. Its operations span the globe – Canada, U.S., Europe, South America, Australia, Europe, Asia, Indonesia, Africa and Turkey. Major Drilling is the largest holding in both Norrep funds (7.8 per cent in Norrep and 7.2 per cent in Norrep II).
* CEO: Francis McGuire.
* Head Office: Moncton, N.B.
* Vital Stats: Current Price/Earnings Ratio, 60.9; Revenue (last 12 mos), $182.2 million; 5-Yr Revenue Growth, 3.9%; Profit (last 12 mos), $6.3 million; Market Cap, $152.62 million; Shares Outstanding, 16.07 million.
* Spiropoulos’s View: “I think this is a great time for investors to step into this company with the recent pullback. It’s a great company, it makes money, generates cash flow and is well positioned for the mining cycle which we believe is in its early stage. There is not that much competition in the more technically oriented drilling, and that’s where they dominate and make their greatest profits.”
* Spiropoulos’s Risk Rating: Medium.
* Web Watch: www.majordrilling.com



SECOND STAR
* CP Ships (TEU-TSX)
* Recent Price: $25.36.
* 52-Week Range: $17.20-$30.64.
* Snapshot: CP Ships is an international shipper providing ocean container transportation services and related inland transportation services.
* CEO: Ray Miles.
* Head Office: London, U.K.
* Vital Stats: Current Price/Earnings Ratio, 22.7; Revenue (last 12 mos), $4.4 billion; Profit (last 12 mos), $100 million; Market Cap, $2.28 billion; Shares Outstanding, 89.83 million; Dividend Yield, 0.8 per cent.
* Spiropoulos’s View: “This company has had a great run in the past year but I think it’s a great way for investors to play the Chinese market without having to invest in Chinese companies. They do a great deal of product shipments from the Far East and their business has been improving dramatically year over year.
“I also think this is a story where we’re in the early stage of the cycle of the general pickup in trade between Asia and the United States. Shipping companies are one of the main beneficiaries of such a cycle. It allows you to play the growth in different ways, in the economic market and the Asian market.”
* Spiropoulos’s Risk Rating: Low.
* Web Watch: www.cpships.com



THIRD STAR
* Call-Net Enterprises (FON-TSX)
* Recent Price: $5.60.
* 52-Week Range: $1.10-$6.10.
* Snapshot: Through its wholly owned subsidiary, Sprint, Call-Net provides telecommunications services across Canada, including local service, long distance, data and online services.
* CEO: William Linton.
* Head Office: North York, Ont.
* Vital Stats: Revenue (last 12 mos), $879.30 million; Profit/Loss (last 12 mos), $43.50 million loss; Market Cap, $25.21 million; Shares Outstanding, 4.50 million.
Spiropoulos’s View: “I like the way they’ve emerged from bankruptcy and restructured their balance sheet. The new management is more focused on free-cash flow and the company has been able to generate free-cash flow in three of the last four quarters.
“I think they may also benefit because the CRTC (Canadian Radio-television and Telecommunications Commission) decision that there must be more competition in the marketplace and they’ve changed a number of rules that are more favorable for (smaller) competitors. There aren’t many competitors left but I think the few that are left are going to prosper disproportionately.
“This is an aggressive pick because the company is almost $400 million in debt.”
* Spiropoulos’s Risk Rating: High.
* Web Watch: www.call-net.ca
Spiropoulos’s EDGE Record: +26.8%. Best Pick: Major Drilling Group (MDI-TSX) +72.7 per cent. Worst Pick: Rio Narcea Gold (RNG-TSX) -6.7 per cent. Disclosure: Spiropoulos owns shares in the Norrep funds in which the featured stocks are held but does not own the individual stocks.