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

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Jason Donville is president and director of research of Calgary-based Lightyear Capital.

Donville’s Outlook: “I’m fairly positive on the market, but my feeling is still that investors should focus on buying outstanding companies regardless of where we are in the economic cycle, which is very hard to predict. Having said that, I think the broad economy, particularly in Canada, is looking good. I think the U.S. economy is less certain.

“There’s an old expression that markets climb a wall of worry. So a certain amount of skepticism and worry within the marketplace is actually a good sign. When you get straight-out euphoria, you know that most of the good news is in the price. I think the fact that people are sort of worrying and chewing their fingernails right now is a healthy sign for the market.”



FIRST STAR

* Aastra Technologies (AAH-TSX)

* Recent Price: $22.

* 12-Month Range: $8.50-$22.50.

* Donville’s Call: Buy.

* 12-Month Target: $28.

* Snapshot: Aastra designs and markets consumer telecommunications products such as desk phones, serving most North American telephone companies while strengthening its foothold in Europe, South America and Asia. Aastra recently released quarter financials (through March 31) showing $45.3 million in revenue and $5.6 million (38 cents per share) in profit.

* CEO: Francis Shen.

* Head Office: Concord, Ont. (72 employees).

* Vital Stats: Price/Earnings Ratio, 14.2; Revenue (last 12 mos), $160.1 million; Profit (last 12 mos), $19.5 million; Market Cap, $321.3 million; Shares Outstanding, 14.6 million.

* Donville’s Comment: “They’re an extremely well-managed company, they have an extremely low cost structure, they’re in a market that is probably set for a recovery some time this year and they have a very strong record of making astute acquisitions.”

* Donville’s Risk Rating: Medium.

* Web watch: www.aastra.com



SECOND STAR

* Danier Leather (DL-TSX)

* Recent Price: $18.95.

* 12-Month Range: $8.75-$18.95.

* Donville’s Call: Buy.

* 12-Month Target: $25.

* Snapshot: Danier is an integrated designer, manufacturer and retailer of fashion leather and suede outerwear and accessories.

* CEO: Jeffrey Wortsman.

* Head Office: Toronto (1,050 employees).

* Vital Stats: Price/Earnings Ratio, 14.2; Revenue (last 12 mos), $181.6 million; Profit (last 12 mos), $12.4 million; Market Cap, $106.5 million; Shares Outstanding, 5.6 million.

* Donville’s Comment: “This is probably the best-managed junior retailer in Canada. The company has a high return on equity and the stock is also cheap, trading on a 12-month forward P/E (price/earnings ratio) of about 10 times. I think that a return in consumer confidence will benefit the company greatly.”

* Risk Rating: Medium.

* Web watch: www.danier.com

THIRD STAR

* EMJ Data Systems (EMJ-TSX)

* Recent Price: $4.65.

* 12-Month Range: $3.40-$5.20.

* Donville’s Call: Buy.

* 12-Month Target: $6.50.

* Snapshot: EMJ is a distributor of computer hardware and software, specializing in niche markets such as Apple, Digital Video and Storage Solutions.

* CEO: James Estill.

* Head Office: Guelph, Ont. (185 employees).

* Vital Stats: Price/Earnings Ratio, 9.3; Revenue (last 12 mos), $193.6 million; Profit (last 12 mos), $4.1 million; Market Cap, $36.6 million; Shares Outstanding, 7.9 million; Dividend Yield, 0.9%.

* Donville’s Comment: “What I like about this company is that it’s a huge cash cow. It’s one of the largest distributors of computer equipment in Canada, it has exceptional management, every employee of the company is a shareholder and the company’s track record in terms of hitting consistent high return on equity is second to none. I think that, with an improvement in the economy as we move into the second half of the year, the company is probably looking for a very strong year next year. In terms of a P/E ratio, I’ve got them at roughly six-and-a-half times next year’s earnings.”

* Risk Rating: Medium.

* Web watch: www.emjdata.ca

* Donville’s Record (six picks since Oct.): +30% (Canadian Crude Separators +86%, Forzani Group +53%, Pason Systems +41%, Home Capital Group +19%, Liquidation World -16%, Canadian Western Bank -4%). Donville continues to recommend these stocks.

* Disclosure: Lightyear Capital may hold positions in the featured stocks. Donville says he personally owns shares in Aastra.