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

FEATURED PRO: Garey Aitken is vice-president and director of equity research at Calgary-based Bissett Investment Management (www.franklintempleton).

Bissett’s Fund Record: (based on 12-month performance through Oct. 31): Bissett Canadian Equity -5.8% (compared to -7.7% for the index); Bissett Large Cap -5.8 (-11.6 index); Bissett Small Cap +24.6 (+6.3 index); Bissett Microcap +49.0% (+6.3 index).

Aitken’s Perspective: “This has been a market that has rewarded investors focused on the underlying fundamentals of a company, and at Bissett we really key on companies that have demonstrated an ability to grow in a profitable fashion. We want to ensure that we’re investing in profitable companies and, secondly, and equally as important, we want to be sure we don’t pay too much for that. These companies (3 Stars) are examples of old-economy businesses but businesses we think can continue to grow. It’s earnings growth that we think translates into wealth generation for investors.

“We think the market is pretty fairly valued right now. We’ve gone through an unprecedented evaluation bubble and we think those days are behind us. We’ve got to see underlying quality business growth to take us to higher levels from here. This is a very conducive environment for stock pickers - people that roll up their sleeves and do their homework.



FIRST STAR
* Bonavista Petroleum (BNP-TSX).
* Recent Price: $30.85.
* 12-Month Range: $25.25-$35.60.
* Snapshot: One of few major players left standing from the Canadian oilpatch consolidation, this intermediate oil and gas producer is focused on acquisition, exploration and development of properties in Western Canada. It is the largest holding (4.7%) in the Bissett Small Cap Fund and is also in the Bissett Equity Fund.
* CEO: Keith MacPhail.
* Head Office: Calgary (67 employees).
* Vital Stats: Current Price/Earnings Ratio, 20.5; Revenue (last 12 mos), $270.2 million; Profit (last 12 mos), $46.2 million; 5-Yr Revenue Growth, 109.2%; Market Cap, $1.04 billion; Shares Outstanding, 32.81 million.
* Aitken’s Comment: “This company has all of the things we look for. It has strong management, a consistent record, it continues to be one of the lowest-cost producers and it has a continued strong growth profile.”
* Aitken’s Risk Rating: Medium.



SECOND STAR
* Magna International (MG.A-TSX)
* Recent Price: $84.30.
* 12-Month Range: $78.67-$122.
* Snapshot: When you think auto parts, you think Magna. Magna does business out of 176 manufacturing divisions and 43 product development and engineering centres in North America, South America, Europe and Asia and employs 67,000 people. It’s a holding in the Bissett Canadian Equity and the Bissett Large Cap funds.
* CEO: Belinda Stronach.
* Head Office: Aurora, Ont. (67,000 employees).
* Vital Stats: Current Price/Earnings Ratio, 8.8; Revenue (last 12 mos), $19.4 billion; 5-Yr Revenue Growth, 22.1%; Profit (last 12 mos), $891.0 million; 5-Yr Profit Growth, 18.0%; Market Cap, $7.97 billion; Shares Outstanding, 94.46 million; Dividend Yield, 2.54%.
* Aitken’s Comment: “The stock price has certainly been under pressure of late and the principle reason for that is people’s concern about what’s going to happen with car and truck sales next year and what that means for industry production levels. However, this is a company that has delivered very nice growth over the years and we continue to see it gaining market share and growing much faster than the underlying auto industry. It has a terrific valuation right now trading at less than 10 times earnings (per share), it has a strong balance sheet and significant free cash flow. We think that over the next few years, earnings-per-share growth is going to translate into a significant stock price increase.”
* Aitken’s Risk Rating: Low.
* Web Watch: www.magna.com



THIRD STAR
* Kingsway Financial Services (KFS-TSX)
* Recent Price: $12.00.
* 12-Month Range: $9.50-$20.60.
* Snapshot: Kingsway is a major player in the non-
standard auto insurance business, covering the high-risk insurance space. Besides a strong foothold in Ontario, the company has been penetrating the U.S. market. It is a holding in the Bissett Canadian Equity and Bissett Small Cap funds.
* CEO: William Star.
* Head Office: Mississauga, Ont. (1,250 employees).
* Vital Stats: Current Price/Earnings Ratio, 8.9; Revenue (last 12 mos), $1.3 billion; 5-Yr Revenue Growth, 43.1%; Profit (last 12 mos), $56.8 million; 5-Yr Profit Growth, 10.3%; Market Cap, $583.30 million; Shares Outstanding, 48.77 million.
* Aitken’s Comment: “We think that this is a great niche Canadian financial services play. Their primary business is non-standard insurance. I think the main concern has been the Ontario marketplace and the recent difficult conditions there, with a lot of fraudulent claims being submitted which is difficult for the company to avoid. That has cost them money. We think there’s going to be progress made in terms of legislation around fraud in the Ontario marketplace and, even if it doesn’t improve at the pace that we envision, they’ve got lots of opportunities in other markets. It’s an attractively valued stock, trading at less than 10 times earnings (per share).”
* Aitken’s Risk Rating: High.
* Web Watch: www.kingsway-financial.com
* Disclosure: Aitken says he directly owns shares in Bonavista Petroleum and also holds all three featured
companies indirectly within Bissett Funds.