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

FEATURED PRO: Martin Ferguson is a partner and portfolio manager with Calgary-based Mawer Investment Management (www.mawer.com).

A nine-year veteran at Mawer, Ferguson manages the small-cap Mawer New Canada Fund. Fund Form: The Mawer New Canada Fund has a three-year compound annual return of 20.5 per cent, compared to the group average of 0.1 per cent. The one-year return is 13 per cent (group average 6.5 per cent).

Management Expense Ratio (MER): 1.59 per cent. Ferguson’s Perspective: “I think the market is discounting a lot of fundamental improvements that we’ve seen in the economy and in corporations, and is overly optimistic in some cases.

“There are still some pockets of value in some of the oil service and energy companies and specific individual companies. The market certainly is not as cheap as it was in March of this year or October of last year.”



FIRST STAR
* CHC Helicopter (FLY.A-TSX)
* Recent Price: $27.50.
* 52-Week Range: $21.64-$36.05.
* Snapshot: CHC provides helicopter services worldwide with a focus on offshore support for the energy industry. The company also provides flight training and maintenance services.
* CEO: Craig Dobbin.
* Head Office: St. John’s, Nfld. (2,537 employees).
* Vital Stats: Current Price/Earnings Ratio, 8.8; Revenue (last 12 mos), $722.4 million; 5-Yr Revenue Growth, 20.2%; Net Earnings (last 12 mos), $66.1 million;
5-Yr Earnings Growth, 19.8%; Market Cap, $492.84 million; Shares Outstanding, 17.92 million.
* Ferguson’s View: “I think we still have good upside left in this stock. We’ve had some seasonally slow and cyclically slow periods of activity, but the business model remains firmly intact. They’ve been renewing a lot of their long-term contracts that have become due at higher rates, and I think it’s a solid investment at this level.”
* Ferguson’s Risk Rating: Medium (relative to the small-cap sector).
* Web watch: www.chc.ca



SECOND STAR
* Premium Brands (FFF-TSX)
* Recent Price: $8.05.
* 52-Week Range: $6.51-$13.
* Snapshot: Premium manufactures and distributes a variety of branded consumer food products in Canada and the western U.S., featuring brands such as Fletcher’s, Grimm’s, Harvest, McSweeney’s and Goodlife.
* CEO: Fred Knoedler.
* Head Office: Vancouver (1,500 employees).
* Vital Stats: Revenue (last 12 mos), $276.6 million; Net Earnings/Loss (last 12 mos), $7.5 million Loss; Market Cap, $83.97 million; Shares Outstanding, 10.43 million.
n Ferguson’s View: “This company has disappointed, but I still think it’s in its infancy as far as being free from the Saskatchewan Wheat Pool (a major shareholder). The company has made a lot of divestitures and acquisitions and restructured itself so that it has diversified from a food processor. They were hurt by the mad-cow disease (the company estimated that it lost $4 million due to the scare) because they do a lot of exporting to Japan and, although they primarily deal in pork, they do have some beef products.”
* Ferguson’s Risk Rating: Medium.



THIRD STAR
* Impact Energy (IEY-TSX)
* Recent Price: $1.40.
* 52-Week Range: $1.25-$1.91.
* Snapshot: Impact’s oil and gas operations are focused on undeveloped land in the gas-prone, deeper western part of the Western Canadian Basin in Alberta, northeastern B.C. and Montana.
* CEO: Peter Bannister.
* Head Office: Calgary.
* Vital Stats: Current Price/Earnings Ratio, 22.0; Revenue (last 12 mos), $16.9 million; Net Earnings (last 12 mos), $3.8 million; Market Cap, $103.55 million; Shares Outstanding, 73.96 million.
* Ferguson’s View: “Impact is, at its name implies, a
higher-risk oil and gas exploration company, primarily in natural gas. They have a very good asset base on which the net asset value is approximately $1.50 and the stock is trading below that. A lot of the value of this company will come in exploration success and they have some very good exploration properties. They manage risk in two ways: one, by keeping operatorship over everything they have; and two, by farming out working interests in their exploration properties. They’d rather have a 10-per-cent exposure with minimal capital stake in a very large exploration play rather than a 100-per-cent play that could either make the company or break the bank.”
* Ferguson’s Risk Rating: High.
* Web watch: www.impactenergy.ca
* Ferguson’s Edge Record (18 picks since Oct./01): +23.5%. Best Pick: Home Capital Group (HCG.B-TSX) +103.5%. Worst Pick: FirstService Corp. (FSV-TSX
-12.9%).
* Disclosure: Mawer partners are restricted from owning individual stocks that are held in their funds but may hold the stocks indirectly through the funds.