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

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Martin Ferguson, partner and portfolio manager at Calgary-based Mawer Investment Management . Ferguson is a chartered financial analyst with 19 years experience. The featured stocks are holdings in the New Canada Fund which Ferguson manages. The fund is up 38 per cent in the past year (through Feb. 28) and 19.1 per cent over three years.

Ferguson’s Outlook: “I think it’s highly likely that the market will recover, but I think the market is discounting a stronger recovery than my highest probability shows will happen.”

FIRST STAR

* Russel Metals (RUS-TSE).

* Recent Price: $4.24.

* 12-Month Range: $2.90-$4.24.

* Snapshot: Russel is one of the largest metals distribution and processing companies in North America, based on revenue and tons sold. Its distribution business is primarily in three segments: service centres; energy sector pipe, tube, valves and fittings; and import/export.

* CEO: Bud Siegel Jr.

* Head Office: Mississauga, Ont. (1,924 employees).

* Vital Stats: Price/Earnings Ratio, 8.5; Revenue (last 12 mos), $1.4 billion; 5-Yr Revenue Growth, -1.8%; Profit (last 12 mos), $8.6 million; Market Cap, $144.4 million; Shares Outstanding, 10.3 million.

* Ferguson’s Comment: “With small caps, my first criteria is looking for strong management. They had a new management . . . in 1997 and they’ve really done good things. It’s a company that has proven that with the capital it has, it is able to create wealth. Right now, we’re in the trough of the steel cycle with not only steel prices down, but steel activity down. They’ve taken this opportunity to decrease the amount of working capital in the company and are preparing for the upswing, whenever it comes.”

* Ferguson’s Risk Rating: Medium.

“They’re very good managers, but they do have leverage on their balance sheet. Any time you have leverage on your balance sheet, there’s a concern.

“Secondly, although people believe there’s an ability for an up cycle in steel, (that) may not happen right away. Thirdly, the U.S. has just put some tariffs on steel imports into the U.S. which will affect Canadian companies.” Russel has some operations in the U.S.

* Web watch: www.russelmetals.com

SECOND STAR

* Uni-Select (UNS-TSE).

* Recent Price: $18.10.

* 12-Month Range: $11-$19.50.

* Snapshot: Uni-Select is Canada’s second largest distributor of automotive parts and heavy duty replacement parts, equipment, tools and accessories.

* CEO: Jacques Landreville.

* Head Office: Boucherville, Que. (975 employees).

* Vital Stats: Price/Earnings Ratio, 15.9; Revenue (last 12 mos), $608.5 million; Profit (last 12 mos), $19.5 million; Market Cap, $323.7 million; Shares Outstanding, 18 million; Dividend Yield, 1.2%.

* Ferguson’s Comment: “This is basically a logistics company. It has proven year in and year out that it is an astute operator. It has excellent management that knows what’s important and it has strong financials.”

* Ferguson’s Risk Rating: Medium.

“Part of the risk is the fact that it has run up from under $10 to $18.25 in less than a year. I still think it represents very good value.”

* Web watch: www.uni-select.com

THIRD STAR

* Premium Brands (FFF-TSE).

* Recent Price: $14.

* 12-Month Range: $10.05-$16.75.

* Snapshot: Premium Brands is a pork processor with operations in Red Deer, Edmonton, Vancouver, Richmond, B.C., Yorkton, Sask., and the U.S. It also operates the subsidiary Goodlife Brands which provides home delivery of frozen foods.

* CEO: Fred Knoedler.

* Head Office: Vancouver (2,406 employees).

* Vital Stats: Price/Earnings Ratio, 8.5; Revenue (last 12 mos), $332.8 million; Profit (last 12 mos), $14.9 million; Market Cap, $144.4 million; Shares Outstanding, 10.3 million.

* Ferguson’s Comment: “Saskatchewan Wheat Pool was a controlling shareholder in Premium Brands and, basically, Saskatchewan Wheat Pool caused as many problems as they solved for Premium Brands. What eventually happened is that Premium Brands bought back Saskatchewan Wheat Pool’s stake in itself (about a year ago) and now they have an entrepreneurial management that is finally free of this and able to do what they want to do. They’ve spent a huge amount on their food-processing division. There are good synergies coming as they fill their plants and grow. And they have great management.”

* Ferguson’s Risk Rating: Medium.

“They have a levered balance sheet but they announced recently that they’re selling non-core assets.”

* Ferguson’s Record (Jan. 17 picks): +31% (CHC Helicopters +46%, Wittke, formerly Northside Group +38%, Mullen Transportation +10%). He continues to recommend these stocks.

* Disclosure: Mawer partners are restricted from owning individual stocks in their funds, but may hold the stocks indirectly in funds.