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

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Josef Schachter, president, Calgary-based Schachter Asset Management.

Schachter’s 2002 Outlook: “I think 2002 is going to be a good year. I think energy prices will recover. We’re very bullish on the market.”

Schachter’s 2002 targets are as follows. He believes the TSE 300 Index will reach 9,000 during 2002 (recently at 7,455), the Dow Jones 30 will reach 12,000 (recently at 9,985) and the Nasdaq Composite will reach 2,600 (recently at 1,918).



FIRST STAR
* Nortel Networks (NT-TSE)
* Recent Price: $10.15.
* Year Range: $7.50-$61.10.
* Schachter’s 12-month Target: $20.
* Snapshot: Nortel is an Internet, communications and fibre-optics company for service providers and enterprises spanning optical long-haul networks, wireless networks and metro networks.
* CEO: Frank Dunn.
* Head Office: Brampton, Ont. (76,712 employees).
* Vital Stats: Revenue (last 12 mos), $35.7 billion; 5-Yr Revenue Growth, 18.9%; Loss (last 12 mos), $40.3 billion; Market Cap, $34.7 billion; Shares Outstanding, 3.2 billion.
* Schachter’s Comment: “Nortel is going to produce revenue of $4.5-$5 billion a quarter during 2002 and at $4 billion (per quarter) they break even, according to the company. Once the company starts showing that the order backlog is rising, that the revenues are strong and that they’re profitable, you start to put a price-to-sales ratio of 21/2 times on the company and you’ve got a $20 stock price.”
* Schachter’s Risk Rating: Medium.
* Web watch: www.nortelnetworks.com



SECOND STAR
* Equatorial Energy (OZ-TSE)
* Recent Price: $1.80.
* Year Range: $1.55-$4.20.
* Schachter’s 12-month Target: $2.50+.
* Snapshot: Equatorial is engaged in the acquisition, exploration and development of petroleum and natural gas interests in Western Canada and Indonesia.
* CEO: John Rooney.
* Head Office: Calgary.
* Vital Stats: Revenue (last 12 mos), $145.3 million; Loss (last 12 mos), $4.5 million; Market Cap, $35.5 million; Shares Outstanding, 21.2 million.
* Schachter’s Comment: “Equatorial is down now because of low oil prices and because they didn’t consummate a deal in Indonesia, but I think the company should do $1.40-$1.50 per share in cash flow in 2002. Therefore, the company should trade at over two times cash flow.”
* Schachter’s Risk Rating: High.
* Web watch: www.equatorial.net



THIRD STAR
* Halliburton Company (HAL-NYSE)
* Recent Price: $12.82 U.S.
* Year Range: $10.94-$49.25 US.
* Schachter’s 12-month Target: $20+ US.
* Snapshot: Halliburton, founded in 1919, is the world’s largest oilfield services company.
* Litigation: Courts have recently ordered Halliburton to pay in excess of $100 million US in damages related to asbestos suits. Appeals are planned.
* CEO: David Lesar.
* Head Office: Dallas (93,000 employees).
* Vital Stats (figures in US dollars): Price/Earnings Ratio, 14.9; Revenue (last 12 mos), $13.0 billion; 5-Yr Revenue Growth, 12.2%; Profit (last 12 mos), $375 million; Market Cap, $5.5 billion; Shares Outstanding, 42.9 million; Dividend Yield, 3.9%.
* Schachter’s Comment: “The stock got murdered in December because of the asbestos issue, but they’ve said that they’re going to fight it. We think the company will do $1.30 (US) per share in earnings in 2002 and that the company deserves a market multiple so we think this is worth over $20 despite the legal suits. The company will fight these suits vociferously and we think over time the company will win their appeals and be a survivor.”
* Schachter’s Risk Rating: High.
* Web watch: www.halliburton.com

* Disclosure: Schachter says all three stocks are held in his company’s corporate account.