(Every week, Business Edge writer Gyle Konotopetz profiles the top three stock picks of some of Canada’s most successful investment pros.)

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Jason Donville, president and director of research, Calgary-based Lightyear Capital (www.lightyearcapital.com).
Donville’s Strategy: “Due to the very powerful liquidation being applied to the economic system, I think we’re going to get a very sharp bounce some time in 2002. I think investors need to be invested, even if it’s in defensive stocks. We’re looking basically for growth stocks with a strong defensive capability. We use sell recommendations which are not very common. We’ve gotten heat for that, but we see ourselves as fiduciaries and we’ll call a spade a spade. About 15 per cent of our recommendations are sells compared to an industry norm of about one per cent.”

First Star
* Canadian Crude Separators (CCR-TSE)
* Recent Price/Year Range: $6.60 ($4.25-$7.52).
* Donville’s Recommendation: Buy.
* 12-month Target: $8.50.
* Snapshot: CCR provides oilfield waste treatment, recovery and disposal solutions. The company’s Concord division operates service rigs.
* CEO: David Werklund.
* Head Office: Calgary (350 employees).
* Vital Stats: Price/earnings ratio, 4.9; Revenue (last 12 mos), $86.1 million; Earnings (last 12 mos), $17.0 million; Market Cap, $86.8 million; Shares Outstanding, 13.2 million.
* Donville’s Comment: “They probably have the best technology in the business. On their waste-disposal side, their gross margins are approaching 60 per cent, which we believe is sustainable. The return on average equity is 33 per cent, which is absolutely amazing for an industrial stock.”
* Risk Rating: Medium.

Second Star
* Liquidation World (LQW-TSE)
* Recent Price/Year Range: $9.85 ($4.10-$10.58).
* Donville’s Recommendation: Buy.
* 12-month Target: $13.50.
* Snapshot: Liquidation World specializes in marketing merchandise from distress situations, such as bankruptcies, receiverships, closeouts, inventory overruns and insurance claims. The retail outlets are in all Canadian provinces except the Maritimes and in three states – Idaho, Ohio and Washington.
* CEO: Dale Gillespie.
* Head Office: Calgary (1,649 employees).
* Vital Stats: Price/earnings ratio, 8.3; Revenue (last 12 mos), $178.1 million; 5-yr Revenue Growth, 19.9 per cent; Earnings (last 12 mos), $7.4 million; 5-yr Earnings Growth, 16.3 per cent; Market Cap, $83.5 million; Shares Outstanding, 8.5 million.
* Donville’s Comment: “The consumer sector is pretty much out of favour right now, but we think this is one of few consumer stocks that can swim against the tide. The reason is that they open more stores when somebody in a mall goes out of business.
“We think there’s going to be a huge opportunity in the next 12 months to move into new stores. In the first quarter, we expect them to open three new stores and 10 stores for the full year.”
* Risk Rating: Low.
* Web Watch: www.liquidationworld.com

Third Star
* Pason Systems (PSI-TSE)
* Recent Price/Year Range: $8.50 ($6-$10.34).
* Donville’s Recommendation: Strong Buy.
* 12-month Target: $15.
* Snapshot: Pason is an oilfield service company that designs, manufactures and rents specialized drilling instrumentation systems for land-based drilling rigs with operations in Canada and the U.S.
* CEO: Jim Hill.
* Head Office: Calgary (75 employees).
* Vital Stats: Price/earnings ratio, 11.2; Revenue (last 12 mos), $54.5 million; Earnings (last 12 mos), $11.7 million; Market Cap, $141.1 million; Shares Outstanding, 16.6 million.
* Donville’s Comment: “This is a great stock for people who are into the oil-and-gas industry and the high-tech world. They do all the systems on oil rigs and they’ve got 90-per-cent market share in Canada. “They have very strong management, a very high return on equity which is projected this year at almost 35 per cent and yet the valuations are pretty reasonable. We’re projecting a 2001 P/E ratio of 9.2 times.”
* Risk Rating: Medium.
* Web watch: www.pason.com

* Disclosure: Lightyear may hold positions in any of the stocks. Donville personally owns Pason stock.