(Business Edge columnist Gyle Konotopetz regularly profiles the top three picks of some of Canada’s most accomplished investment pros.)

FEATURED PRO: Martin Ferguson is a partner and portfolio manager with Mawer Investment Management (www.mawer.com) and manages the Mawer New Canada Fund.

Martin Ferguson

Fund Form: The New Canada Fund has a three-year return of 26.5 per cent compared to the group average of 11.1 per cent (Management Expense Ratio, 1.46 per cent).

Ferguson’s Perspective: “My belief is that the U.S. economy has gotten over the big risk with the (U.S. Federal Reserve) keeping interest rates low, which has enabled corporate America to get onstream, get profitability up and get back on its feet after a profit recession in a time when the U.S. consumer was previously holding the market low.

“As long as they can keep interest rates (in the U.S.) low, I think the economy has a good chance of continuing to improve and the market should do OK. I believe valuations are stretched in many cases, but the market still has upside potential. And there are some very good opportunities still within the small-cap area. The small caps are certainly not overvalued relative to large caps.



FIRST STAR
* Russel Metals (RUS-TSX)
* Recent Price: $9.19.
* 52-Week Range: $4.65-$9.65.
* Snapshot: Russel is a North American metals distribution company that operates in three segments – energy sector pipe, tube, valve and fitter distribution, line service centre distribution and import/export distribution.
* CEO: Edward Siegel Jr.
* Head Office: Mississauga, Ont. (1,924 employees).
* Vital Stats: Current Price/Earnings Ratio, 22.9; Revenue (last 12 mos), $1.5 billion; 5-Yr Revenue Growth, -2.6 per cent; Earnings (last 12 mos), $18.5 million; 5-Yr Earnings Growth, -10.3 per cent; Market Cap, $350.9 million; Shares Outstanding, 38.18
million; Dividend Yield, 3.4 per cent.
* Ferguson’s View: “Russel Metals is doing a good job of integrating Leroux Steel (a company that it acquired). They’ve just refinanced a whack of their debt and management continues to add value.”
* Ferguson’s Risk Rating: Moderate.
n Web Watch: www.russelmetals.com



SECOND STAR
* Transat A.T. (TRZ-TSX)
* Recent Price: $15.05.
* 52-Week Range: $3.40-$15.58.
* Snapshot: Transat operates travel tour operator Air Transat. The company recently sold its French online travel agency Anyway to IAC/InterActiveCorp. for
$54.1 million.
* CEO: Jean-Marc Eustache.
* Head Office: Montreal (400 employees).
* Vital Stats: Current Price/Earnings Ratio, 46.3; Revenue (last 12 mos), $2.2 billion; 5-Yr Revenue Growth, -9.4 per cent; Earnings (last 12 mos), $3.1 million; Market Cap, $483.77 million; Shares Outstanding, 32.14 million.
* Ferguson’s View: “Two positive things have happened with this company. Firstly, they’ve sold an online reservations system out of France (Anyway) for an obscene amount of money, which has given their balance sheet and cash position a boost. The second thing is that they’ve also made a deal with WestJet where, instead of keeping many planes in their own fleet, they are using WestJet’s planes. It’s a win-win for both companies. They also have a new CFO (Nelson Gentiletti) within the past 12 months. I’ve met Nelson before and have good faith in him.”
* Ferguson’s Risk Rating: Moderate.
* Web Watch: www.transat.com



THIRD STAR
* Shawcor (SCL.A-TSX)
* Recent Price: $15.60.
* 52-Week Range: $11.50-$16.80.
* Snapshot: Shawcor is an energy services company that provides technology-based products and services through manufacturing and service centres in 20 countries.
* CEO: Geoffrey Hyland.
* Head Office: Calgary (2,300 employees).
* Vital Stats: Current Price/Earnings Ratio, 136.1; Revenue (last 12 mos), $862.7 million; 5-Yr Revenue Growth, three per cent; Earnings (last 12 mos), $9.1 million; 5-Yr Earnings Growth, -45.1 per cent; Market Cap, $856.27 million; Shares Outstanding, 54.89 million.
* Ferguson’s View: “This is a well-managed company that hasn’t done much in the past several years, but now the capital spending cycle within gas pipelines is starting to look up. They recently bought the rest of Bredero (a company formerly owned by Halliburton) and I foresee earnings rising as activity picks up with them taking advantage of the full synergies of this acquisition.”
* Ferguson’s Risk Rating: Moderate.
* Web Watch: www.shawcor.com

Ferguson’s EDGE Record (since Jan/02): +37 per cent. Best Pick: Russel Metals (RUS-TSX) +114.6 per cent. Worst Pick: Exco Technologies (XTC-TSX) -1.7 per cent.

Disclosure: Mawer partners are restricted from owning individual stocks that are held in their funds, but may own shares in the funds.