FEATURED PRO: Irwin Michael is president of I.A. Michael Investment Counsel and portfolio manager of the ABC series of funds (www.abcfunds.com) - ABC North American, Canadian Equity, Canadian Balanced and American Equity funds.

Fund Form: The ABC North American Equity Fund has a one-year return of 23.5 per cent, compared to the group average of 11.5 per cent.

Management Expense Ratio: Two per cent.

Michael's Perspective: "Generally, we're optimistic as long as (U.S.) interest rates remain where they are or slightly higher. Corporate profits remain positive. Clearly, the high Canadian dollar is going to negatively impact Canadian companies that either export or depend upon a lot of their revenue in U.S. dollars.

"We think the big word for 2006, and to a certain extent it's been the big word of 2005, is consolidation. More and more companies are going to be taken over. In many cases, for instance, it will be cheaper for oil companies to drill on Bay Street as opposed to drilling in the ground. It's sad because you're losing a number of big (Canadian names). Some of the major icon names will continue to be taken over and we expect that trend of mergers and acquisitions to continue."

First Star

* Legacy Hotels Real Estate Investment Trust (TSX:LGY.UN)

* Recent Price: $7.82.

* 52-Week Range: $6.55-$8.24.

* Snapshot: Legacy owns 24 luxury hotels and resorts with accommodations totalling 10,000 guest rooms in Canada and the U.S. The properties are managed by the management of Fairmont Hotels & Resorts. The company's board recently rejected a partial takeover bid from U.S. financier Carl Icahn, recommending shareholders not support the offer.

* CEO: Neil Labatte.

* Head Office: Toronto.

* Vital Stats: Revenue (last 12 mos), $748.2 million; 5-Yr Revenue Growth, -14.2 per cent; Earnings/Loss (last 12 mos), $14.2 million loss; Market Cap, $699.1 million; Shares Outstanding, 89.4 million; Quarterly Distrib-ution, eight cents per unit; Dividend Yield, 4.1 per cent.

* Michael's View: "We like this company because they own hotels under the Fairmont name and Fairmont is in play with Carl Icahn bidding for 51 per cent of that company. Fairmont owns 24 per cent of Legacy, so if Icahn wins or if they eventually recalibrate Fairmont to be split up, it would be quite positive for Legacy. Legacy's hotels are legacy and icon properties, so to speak. They include the Royal York Hotel in Toronto, the Queen Elizabeth Hotel in Montreal, the Chateau Frontenac in Quebec City and the Chateau Laurier in Ottawa. You can't replace these kinds of hotels. If something brews with Fairmont, you might see Legacy split up and the hotels go to a bunch of different purchasers, maybe even to a company like Four Seasons Hotels. People look at this company on the basis of revenue per room and a lot of these hotels, including Legacy's, are still hurting from 9/11. However, we look at it not on revenue per room but on net asset value (NAV). We reckon its NAV is around $10 and, if it's taken over or whatever, you could see something in excess of that."

* Michael's Risk Rating: Medium.

* Web Watch: www.legacyhotels.ca

Second Star

* John B. Sanfilippo & Son, Inc. (Nasdaq:JBSS)

* Recent Price: $12.86 US.

* 52-Week Range: $12.70-$26.97 US.

* Snapshot: John B. Sanfilippo processes and distributes shelled and in-shell nuts under various private labels, including Fisher, Evon's, Flavor Tree, Sunshine Country and Texas Prime.

* CEO: Jasper B. Sanfilippo.

* Head Office: Elk Grove Village, Ill.

* Vital Stats (in U.S. dollars): Current Price/Earnings Ratio, 12.9; Revenue (last 12 mos), $585.7 million; 5-Yr Revenue Growth, 12.6 per cent; Earnings (last 12 mos), $10.8 million; 5-Yr Earnings Growth, -15.8 per cent; Market Cap, $136.08 million; Shares Outstanding, 10.6 million.

* Michael's View: "They have about 10 per cent of a very fragmented peanuts market. This is a neat play because the stock was trading as high as $54 US back in '04 and we think it's cheap now. Some of the parts are worth more than the whole and it's trading at about 70 per cent of its book value. We think the book value is understated because they own a lot of real estate purchased in the 1980s. They got hurt by high peanut prices and they couldn't pass on the prices in the package quickly enough. There's a shortage of nut trees but more are being planted. What's interesting is that nuts have probably doubled in terms of per capita consumption in the United States over the past 30 years with people moving away from high carbs."

* Michael's Risk Rating: High.

* Web Watch: www.jbssinc.com

Third Star

* Magellan Aerospace Corp. (TSX:MAL)

* Recent Price: $2.76.

* 52-Week Range: $2.36-$3.60.

* Snapshot: Magellan is a global supplier of aerospace equipment, designing and manufacturing engine and structure components for aerospace markets as well as products for the military and space markets.

* CEO: Richard Neill.

* Head Office: Mississauga.

* Vital Stats: Revenue (last 12 mos), $571.1 million; 5-Yr Revenue Growth, -2.7 per cent; Earnings/Loss (last 12 mos), $4.7 million loss; Market Cap, $250.4 million; Shares Outstanding, 90.8 million.

* Michael's View: "This company has been hurt by margins and it was hurt by 9/11. The stock has been languishing and very much out of favour, but what's interesting is that Murray Edwards (a successful financier who is the company chairman) has bellied up to the bar and provided financing for the company. Edwards has about 25 per cent of the equity in the company and he has backstopped all of the debt.

We think the book value is probably somewhere in the mid-$3s to high-$3s."

* Michael's Risk Rating: High.

* Web Watch: www.malaero.com

Michael's Edge Record (past 12 mos): -2.5 per cent. Best Pick: Canam Manac Group (TSX:CAM.SV.A) +3.6 per cent. Worst Pick: Handleman Co. (NYSE:HDL) -7 per cent.

Disclosure: Michael is the largest individual unitholder of the ABC Funds. He does not own the individual stocks that are featured.

(This feature is provided for information purposes. Investors are advised to do their own research or consult a qualified investment professional before making investment decisions.)

(Gyle Konotopetz can be reached at gyle@businessedge.ca)