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

FEATURED PRO

Jim Bartlett is a Vancouver-based analyst with Odlum Brown. He specializes in coverage of energy, mining and utility companies.

On Nov. 15, Bartlett made PanCanadian Energy and Alberta Energy Company two of his top three picks, predicting they would merge. The companies have since done a mega-merger deal that has yet to close. PanCanadian remains one of his top three picks, and he still favours Alberta Energy, but Bartlett predicts a U.S. company will nix the deal with a sweet offer for PanCanadian.

Said Bartlett: “I believe that the merger will never happen because PanCanadian will be purchased by somebody else at a very good price. When I look at what people paid for Anderson Exploration and Canadian Hunter Exploration (in takeovers last year), PanCanadian is a much better company than either of those companies in terms of assets and, if the Americans still want natural-gas reserves, which I believe they do, they will likely buy PanCanadian. They will look at this as an extremely cheap stock. I personally think that there could be somebody stepping up to the plate sooner rather than later, because you want to step up while natural-gas prices are low and they’re low right now.”



FIRST STAR

* PanCanadian Energy (PCE-TSE)

* Recent Price: $45.95

* 12-Month Range: $35.05-$47.40.

* Bartlett’s Call: Buy (top rating).

* 12-month Target: $53 (does not include possible takeover premium).

* Snapshot: PanCanadian is involved in the acquisition, exploration and development of natural gas, crude oil and natural gas liquids.

* CEO: David O’Brien.

* Head Office: Calgary.

* Vital Stats: Price/Earnings Ratio, 7.5, Revenue (last 12 mos), $11.3 billion; Net Income (last 12 mos), $1.6 billion; Market Cap, $11.65 billion; Shares Outstanding, 256.7 million; Dividend Yield, 0.9%.

* Bartlett’s Comment: “With or without the merger, both PanCanadian Energy and Alberta Energy will do well as natural-gas prices improve.”

* Bartlett’s Risk Rating: Low.

* Web watch: www.pancanadian.ca



SECOND STAR

* Penn West Petroleum Ltd. (PWT-TSE)

* Recent Price: $35.70.

* 12-Month Range: $30.30-$45.25.

* Bartlett’s Call: Buy (top rating).

* 12-Month Target: $42.50.

* Snapshot: Penn West is a senior Canadian independent natural gas and oil producer.

* President: William Andrew.

* Head Office: Calgary (292 employees).

* Vital Stats: Price/Earnings Ratio, 6.0; Revenue (last 12 mos), $1.2 billion; 5-Yr Revenue Growth, 48.1%; Net Income (last 12 mos), $311.4 million; 5-Yr Income Growth, 54.9%; Market Cap, $1.88 billion; Shares Outstanding, 52.7 million.

* Bartlett’s Comment: “They’ve got a good mix of light oil and natural gas production, and they have a reasonably good land position. The company is probably a merger target.”

* Bartlett’s Risk Rating: Medium.

* Web watch: www.pennwest.com

THIRD STAR



* TransAlta Utilities (TA-TSE )

* Recent Price: $21.10.

* 12-Month Range: $19.95-$30.13.

* Bartlett’s Call: Buy (top rating).

* 12-Month Target: $25.60.

* Snapshot: TransAlta is Canada’s largest non-regulated electric generation and marketing company, with more than $7 billion in assets and 9,000 megawatts of capacity either in operation or under construction.

* CEO: Stephen Snyder.

* Head Office: Calgary (2,500 employees).

* Vital Stats: Price/Earnings Ratio, 16.6; Revenue (last 12 mos), $2.5 billion; Net Income (last 12 mos), $494.9 million; Market Cap, $3.55 billion; Shares Outstanding, 168.4 million: Dividend Yield, 4.8%.

* Bartlett’s Comment: “The dividend looks stable, earnings should pick up next year, and the stock is cheap. They’ve been expanding in electric power generation and, theoretically, if the economy grows, electricity is required, and they’re one of the experts in generating power in North America. People with experience in making electricity from coal efficiently like TransAlta are going to grow in the long term because they’ll be able to produce electricity cheaper than people that produce it from natural gas.”

* Bartlett’s Risk Rating: Medium.

* Web watch: www.transalta.com

* Bartlett’s Record (Nov. 15 picks): +5% (Alberta Energy +8%, PanCanadian +5%, TransCanada Pipelines +3%).

* Disclosure: Bartlett says he may hold positions in these stocks.