(Business Edge columnist Gyle Konotopetz regularly profiles the top stock picks of some of Canada’s most accomplished investment pros.)

FEATURED PRO: Randy Oliver is president and senior portfolio manager of Hesperian Capital Management (www.hesperiancapital.com).

The Calgary company manages the Norrep series of funds: Norrep I and Norrep II small-cap funds and the recently launched Norrep Opportunities fund. Management Expense Ratios: Norrep 1, 2.49 per cent; Norrep II, two per cent; Norrep Opportunities, two per cent.

Fund Form: The Norrep I fund has a three-year annualized return of 21.9 per cent compared to the group average of 10.9 per cent for the same period.

Oliver’s Perspective: “Overall, the market is expensive, with higher price/earnings (P/E) multiples than we’re comfortable with and we’re being very careful as we invest on behalf of our clients. We’re trying to invest only in lower P/E stocks with good growth prospects and trying to get a little more dividend yield even with some of our small-cap companies.

“The high price of oil creates nice cash flow in the short term for the oil industry, and it does create a certain amount of economic weakness. I don’t think oil will have that big of an impact on the economy. Oil is a much smaller component of (gross national product) than it was 20 years ago. I think at least half of oil and gas stocks are aggressively priced, but there are still some that we continue to like such as Tusk Energy.”

First Star

* Tusk Energy (TKE-TSX)

* Recent Price: $4.64.

* 52-Week Range:

$3.35-$4.90.

* Snapshot: Tusk Energy is an oil and gas company with operations in Alberta, B.C. and Saskatchewan. The company is in the process of converting into a new energy-trust company and a separate publicly traded exploration company.

* CEO: Norman Holton.

* Head Office: Calgary.

* Vital Stats: Current Price/Earnings Ratio, 12.3; Revenue (last 12 mos), $68.1 million; 5-Yr Revenue Growth, 66.9 per cent; Earnings (last 12 mos), $9.2 million; 5-Yr Earnings Growth, 53.7 per cent; Market Cap, $150.38 million; Shares Outstanding, 32.41 million.

* Oliver’s View: “We think the value of Tusk is between $5 and $5.50 very near term, and it should continue to grow from there. They have a good management team and it’s a good situation that is undervalued in today’s market. It’s trading at a cash-flow multiple of three times compared to lots of other companies in the industry that are trading at six times cash flow. The fact that it is converting to a trust doesn’t make that much difference to me. It’s a low-risk pick for short-term performance.”

* Hesperian’s Risk Rating: Medium.

* Web Watch: www.tusk-energy.com

Second Star

* LionOre Mining International (LIM-TSX)

* Recent Price: $5.15.

* 52-Week Range:

$5-$8.55.

* Snapshot: LionOre is a mining company with nickel and gold production from properties in Botswana and Australia.

* CEO: Colin Steyn.

* Head Office: Toronto (120 employees).

* Vital Stats: Current Price/Earnings Ratio, 11.4; Revenue (last 12 mos), $487.1 million; 5-Yr Revenue Growth, 55.4 per cent; Earnings (last 12 mos), $107.3 million; Market Cap, $1 billion; Shares Outstanding, 195.11 million.

* Oliver’s View: “This is a great play on nickel prices as well as gold prices. LionOre is trading at approximately 4.7 times cash flow (per share) and 7.7 times earnings (per share). Here’s a mining company that actually has a low P/E ratio, has real earnings and a very nice return on equity that is in excess of 20 per cent. With many mining companies now, you’re not getting those kinds of characteristics.”

* Hesperian’s Risk Rating: Medium.

* Web Watch: www.lionore.com

Third Star

* Home Capital Group (HCG-TSX)

* Recent Price: $22 (stock split in past year).

* 52-Week Range:

$8.85-$27.84.

* Snapshot: Home Capital, through its subsidiary Home Trust, provides financial services, including deposits, mortgage lending, retail credit and credit-card issuing in Alberta, B.C., Ontario and Nova Scotia.

* Vital Stats: Current Price/Earnings Ratio, 23.1; Revenue (last 12 mos), $166.1 million; 5-Yr Revenue Growth, 25.7 per cent; Earnings (last 12 mos), $37.4 million; 5-Yr Earnings Growth, 31.7 per cent; Market Cap, $741.71 million; Shares Outstanding, 33.7 million; Dividend Yield, 0.50 per cent.

* Oliver’s View: “This is a niche company in the financial field that has just excelled versus the industry. We first got into this stock about 2 1/2 years ago at $4.50 (price factors in an adjustment on a 2-for-1 stock split).They provide mortgage financing to independent business owners and immigrant families that normally have a hard time getting financing from conventional bank sources. They have loan losses lower than the banking industry that won’t go into this field and they have a 30-per-cent-plus return on equity. “Earnings this year should be $1.28 and $1.66 next year. It’s trading at about 13.8 times next year’s (projected) earnings.”

* Hesperian’s Risk Rating: Medium.

* Web Watch:
www.homecapital.com

Oliver’s Edge Record: +52.6 per cent. Best Pick: Home Capital Group (HCG.B-TSX) +188.5 per cent. Worst Pick: Global Railway Industries (GBI-TSX) -3 per cent.

Disclosure: Oliver says he does not own the individual stocks, but owns positions in the funds in which the featured stocks are held.