(Every week, Business Edge writer Gyle Konotopetz profiles the top three stock picks of one of Canada’s most successful investment pros.)
FEATURED PRO
Gord Currie, Calgary-based oil and gas analyst, Canaccord Capital (www.canaccord.com)
Currie’s Outlook: “Our outlook for oil and gas stocks is pretty modest. We think that oil prices will settle somewhere in the $20 (U.S.) area and natural gas prices at about $2.75 U.S. mcf (per thousand square feet).”
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FIRST STAR
* PanCanadian Energy (PCE-TSE)
* Recent Price: $39.85.
* Year Range: $35.05-$52.30.
* Currie’s Call: Buy.
* 12-month Target: $48.
* Snapshot: PanCanadian is involved in the acquisition, exploration and development of natural gas, crude oil and natural-gas liquids. The company’s core areas are the Western Basin including land in Canada and the U.S., the east coast of Canada, the Gulf of Mexico and the United Kingdom.
* CEO: David O’Brien.
* Head Office: Calgary.
* Vital Stats: Price/Earnings Ratio, 6.6; Revenue (last 12 mos), $11.3 billion; Profit (last 12 mos), $1.6 billion; Market Cap, $10.2 billion; Shares Outstanding, 256.4 million; Dividend Yield, 1.0%.
* Currie’s Comment: “This pick is premised on continued drilling success in the Gulf of Mexico, the Scotia Shelf and in the North Sea. PanCanadian has an extremely good balance sheet.”
* Currie’s Risk Rating: Low.
* Web watch: www.pancanadian.ca
SECOND STAR
* Petro-Canada (PCA-TSE)
* Recent Price: $38.89.
* Year Range: $33.50-$43.65.
* Currie’s Call: Buy.
* 12-month Target: $45.
* Snapshot: Petro-Canada is an integrated oil and gas company. In the upstream sector, the company explores for, develops, produces and markets crude oil and natural gas. In the downstream sector, the company refines, distributes and markets petroleum products and related goods and services.
* CEO: Ron Brenneman.
* Head Office: Calgary (4,024 employees).
* Vital Stats: Price/Earnings Ratio, 8.5; Revenue (last 12 mos), $9.6 billion; 5-Yr Revenue Growth, 12.0%; Profit (last 12 mos), $1.2 billion; 5-Yr Profit Growth, 33.9%; Market Cap, $10.1 billion; Shares Outstanding, 262.2 million; Dividend Yield, 1.0%.
* Currie’s Comment: “This pick is based on the fact that they will be bringing on about 40,000 barrels a day of incremental production on the east coast in the Terra Nova project. They have projects like that in line for the next several years so they should see steady growth in production. Also, as an integrated company, they have some downstream revenue and income that tends to be a little bit less commodity-price sensitive. Like PanCanadian, Petro- Canada also has an extremely good balance sheet.”
* Currie’s Risk Rating: Low.
* Web watch: www.petro-canada.ca
THIRD STAR
* Zargon Oil & Gas (ZAR-TSE)
* Recent Price: $7.20.
* Year Range: $4.10-$7.70.
* Currie’s Call: Buy.
* 12-Month Target: $8.
* Snapshot: Zargon is an upstream oil and gas company with assets in Alberta, B.C., Saskatchewan and Manitoba.
* CEO: Craig Hansen.
* Head Office: Calgary (24 employees).
* Vital Stats: Price/Earnings Ratio, 6.7; Revenue (last 12 mos), $71.9 million; Profit (last 12 mos), $16.1 million; Market Cap, $120 million; Shares Outstanding, 16.7 million.
* Currie’s Comment: “This stock has hung in there reasonably well while a lot of others have been clobbered toward the end of 2001. They think they can grow by 20 per cent this year and next year. The stock has done very well and we think it will continue to do well. It’s kind of a slow-but-steady stock. However, there’s a little more risk than the other companies (PanCanadian and Petro-Canada) but only because it’s a smaller, less liquid stock.”
* Currie’s Risk Rating: High.
* Web watch: www.zargon.ca
* Disclosure: Currie says he personally owns these stocks directly or indirectly.
THREE-STAR PERFORMANCE
(based on picks since Oct. 25): Winners 22, losers 8 (up 8% overall).
* Best/worst picks: CAE Inc. (CAE-TSE) +49%, by Fred Pynn (Bissett & Associates); Mad Katz International (MCZ-TSE) -23%, by Gord Cooper (Taurus Capital).
* Top pro: Fred Pynn +31%.
