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

FEATURED PRO: Fred Pynn is vice-president and portfolio manager with Calgary-based Bissett Investment Management (www.franklintempleton.ca/bissett).

The featured stocks are in the Bissett Canadian Equity Fund that Pynn manages. The fund was down 8.9 per cent in 2002 compared to the group average of -7.9 per cent.

Pynn’s Perspective: “In this environment, I think more conservative stocks make more sense. These are
larger companies, companies with solid track records and companies that pay dividends, so that if the stock market goes nowhere, at least you have some income.

“It’s definitely not the time to speculate and bet on all kinds of fancy things. You’ve got to stick to the fundamentals and buy companies that have businesses you can understand and companies that look like they’re going to be around for more than a few weeks. We try to buy dividend-paying stocks and well-established companies.

“There’s a lot of nervousness in the market right now, but I wouldn’t panic at this juncture. If you feel comfortable with your stocks, you should stay with them. I wouldn’t necessarily advocate putting a whole bunch more money into the market at this time. It’s always easier to buy when it appears the market has touched a bottom and you buy into a rally as opposed to buying on the way down.”



FIRST STAR
* Dorel Industries (DII.B-TSX)
* Recent Price: $38.25.
* 52-Week Range: $27-$39.70.
* Snapshot: Dorel is a consumer products manufacturer and distributor targeting three distinct markets – ready-to-assemble furniture, home furnishings and juvenile furniture and accessories. The company has facilities and offices in North America, Europe and the Orient.
* CEO: Martin Schwartz.
* Head Office: Westmount, Que. (3,600 employees).
* Vital Stats: Current Price/Earnings Ratio, 16.9; Revenue (last 12 mos), $1.5 billion; 5-Yr Revenue Growth, 23.9%; Profit (last 12 mos), $62.9
million; 5-Yr Profit Growth, 11.6%; Market Cap, $1.01 billion; Shares Outstanding, 26.39 million.
* Pynn’s View: “Their share price is depressed because one of their clients in the U.S. is K-Mart which is in financial difficulty. The stock is trading quite cheaply. We think that, even if there is a problem with K-Mart, they also do business with Target and Wal-Mart stores and their sales will move over to other markets.
“Even if the economy doesn’t do so well, people still have to buy their products, like car seats and strollers for their kids and cheap furniture.”
* Pynn’s Risk Rating: Medium.
* Web watch: www.dorel.com



SECOND STAR
* Kingsway Financial (KFS-TSX)
* Recent Price: $13.56.
* 52-Week Range: $9.50-$20.80.
* Snapshot: Kingsway corners the market on bad drivers. It’s a North American property and casualty insurer whose primary business is drivers who do not meet the criteria of standard insurers. It also covers other niche markets such as motorcycles.
* CEO: William Star.
* Head Office: Mississauga, Ont. (1,250 employees).
* Vital Stats: Current Price/Earnings Ratio, 10.0; Revenue (last 12 mos), $1.5 billion; 5-Yr Revenue Growth, 45.0%; Profit (last 12 mos), $64.1
million; 5-Yr Profit Growth, 11.9%; Market Cap, $666.24 million; Shares Outstanding, 48.91 million.
* Pynn’s View: “Because this company does motorcycle insurance and insurance for drivers who can’t get insurance from anyone else, their customers have no choice but to pay their rates so their business tends to be more profitable than the regular insurance business. We also look for Kingsway to participate in the rise in premiums in the insurance industry.
“One of the reasons their stock hasn’t done well is that they announced a share issue which made investors
skittish. The issue didn’t go very well so they pulled it and ended up getting financing with a bond issue which has helped the stock.”
* Pynn’s Risk Rating: High.
* Web watch: www.kingsway-financial.com



THIRD STAR
* Suncor (SU-TSX)
* Recent Price: $25.60.
* 52-Week Range: $22.30-$30.
* Snapshot: When you think oilsands, think Suncor. The company is a world leader in extracting crude oil from the oilsands deposits of northern Alberta. It also explores for and markets natural gas and has a refining and marketing business in Ontario under the Sunoco brand.
* CEO: Rick George.
* Head Office: Calgary (3,300 employees).
* Vital Stats: Current Price/Earnings Ratio, 15.6; Revenue (last 12 mos), $4.4 billion; 5-Yr Revenue Growth, 17.0%; Profit (last 12 mos), $529.0 million; Market Cap, $11.49 billion; Shares Outstanding, 448.97 million; Dividend Yield, 0.66%.
* Pynn’s View: “Our preference in oil and gas stocks is the larger-cap companies and we like Suncor, especially considering it’s an integrated company.
“If the Iraq war happens and the oil prices back off, typically the integrated companies do better than the pure producers do in periods of declining oil prices.
“They’ve expanded their oilsands plant and they’ve basically doubled their (oilsands) production. We expect the oilsands plant will continue to increase its capacity so we see a lot of long-term growth. They’ve also said they don’t believe the Kyoto Protocol will have a big impact on their operating costs.”
* Pynn’s Risk Rating: Low.
* Web watch: www.suncor.com
* Pynn’s Record (15 picks since Oct./01): +1.0%. Best Pick: Gildan Activewear (GIL.A-TSX) +42.7%. Worst Pick: CAE (CAE-TSX) -32.8%).
* Disclosure: Pynn says he does not directly own any of the featured stocks but may own the Bissett funds in which they are held.