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

FEATURED PRO: Peter Arender is a portfolio manager with Acker Finley Asset Management, a Toronto-based firm that manages the QSA series of funds.

The firm specializes in value investing by utilizing quantitative analysis.

Website: www.ackerfinley.com

Fund Form: The QSA Canadian Equity Fund, Series 'A', has a one-year return of 19.1 per cent compared to the group average of 20.5 per cent, and the QSA Enterprise (U.S. dollar) fund has a one-year return of 29.9 per cent (group average, 8.8 per cent). Management Expense Ratios: Canadian Equity, 0.77 per cent; Enterprise, 2.16 per cent.

Arender's Perspective: "I've become less bullish on the market because of how much the valuations have changed. Taking the S&P 500 index as an example, it's trading at around 1,100 right now and I figure it's worth, based on what companies are earning right now, somewhere around 1,200. However, there's nothing that says it has to get there in a straight line so we could have a pullback.

"It certainly isn't as easy to pick stocks as it was last year, so you just can't buy any old stock and expect it to go up this year. I think you probably have to focus more on individual security selection and sector selection."



FIRST STAR
* Biovail Corporation (BVF-TSX)
* Recent Price: $28.87.
* 52-Week Range: $21.50-69.58.
* Snapshot: Biovail is a full-service company engaged in formulation, clinical testing, registration, manufacturing, sale and production of drug products.
* CEO: Eugene Melnyk.
* Head Office: Mississauga, Ont.
* Vital Stats: Revenue (last 12 mos), $1.2 billion; 5-Yr Revenue Growth, 54.6%; Earnings/Loss (last 12 mos), $53.1 million loss; Market Cap, $4.25 billion; Shares Outstanding, 147.05 million.
* Arender's View: "We look at things quantitatively to find what companies are worth and then we look at where they're trading relative to their worth. In Canada, Biovail has one of the highest scores in terms of the disparity of where it's trading and what it's worth.
"There have been some things that have come to light recently that have undermined investors' confidence in the company but, from my reading of things, there's still a very real business there. We think the stock is worth something in the high $30s. We took a full position in December in the low $20s just a day before Jimmy Pattison (Vancouver tycoon) invested in the company."
* Arender's Risk Rating: High.
* Web watch: www.biovail.com



SECOND STAR
* Sobeys Inc. (SBY-TSX)
* Recent Price: $34.82.
* 52-Week Range: $28.80-$42.
* Snapshot: Sobeys operates a range of supermarkets under the brand names of Sobeys, IGA and Price Choppers. The company recently purchased Commisso's Food Market and Commisso's Grocery Distribution for $65 million.
* CEO: Paul Sobey.
* Head Office: Stellarton, N.S.
* Vital Stats: Price/Earnings Ratio, 13.0; Revenue (last 12 mos), $10.7 billion; Earnings (last 12 mos), $172.1 million; Market Cap, $2.29 billion; Shares Outstanding, 65.86 million; Dividend Yield, 1.2%.
* Arender's View: "This company had some labour difficulties last year and some competitive issues with Loblaws and Wal-Mart, but their last earnings report looked pretty good to us. Based on the way their balance sheet is structured and based on their earnings, even if they're not growing their earnings we figure the stock is probably worth in the mid-$40s and it could even be worth as much as $50.
"With investors positioning for the cyclical recovery in the economy last year, grocery stores were obviously not the first names on the buy list. I think it's possible as the economic recovery becomes last year's story, you'll find people gradually broadening the types of sectors to look at, which should benefit the consumer staples area."
* Arender's Risk Rating: Medium.
* Web watch: www.sobeys.com



THIRD STAR
* Molson Inc. (MOL.A-TSX)
* Recent Price: $35.90.
* 52-Week Range: $30.70-$38.75.
* Snapshot: Founded in 1786 by John Molson, Molson is Canada's oldest brewer and one of the world's biggest brewers. There are six breweries in Canada, the company also owns the Molson rights in the U.S. and it is also Brazil's second-largest brewer.
* CEO: James Arnett.
* Head Office: Toronto.
n Vital Stats: Price/Earnings Ratio, 16.5; Revenue (last 12 mos), $3 billion; 5-Yr Revenue Growth, 10.7%; Earnings (last 12 mos), $278.8 million; Market Cap, $4.26 billion; Shares Outstanding, 118.56 million, Dividend Yield, 1.5%.
* Arender's View: "Molson had a bit of a hiccup last year in their earnings but I think that has stabilized. I think they'll be earning something like $2.60 a share for the (fiscal) year ending March/'04 and about $3 a share for the year after that. That tells us, based on how the balance sheet is structured, that the company should be worth about $43 a share. The company doesn't really need to grow its earnings to get there so there's a pretty big margin for error, there's a good return on equity and, if the economic recovery isn't as strong as
anticipated, then you could see a strong rotation into stocks like this."
* Arender's Risk Rating: Medium.
* Web watch: www.molson.com
Arender's EDGE Record: +26.7%. Best Pick: Capital One Financial (COF-NYSE) +93.1%; Worst Pick: King Pharmaceuticals (KG-NYSE) -1.9%.

Disclosure: Arender owns shares in the QSA funds in which the featured stocks are held.