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

FEATURED PRO: Wayne Deans is co-founder and partner with Vancouver-based Deans Knight Capital Management and manages the Northwest Specialty Equity Fund for Northwest Mutual Funds.

He focuses on emerging companies with distinct
competitive advantages and growing market shares. The featured stocks are held in the fund.

Fund Performance: The Northwest Specialty Equity Fund has gained 37.2 per cent in the past 12 months (through Oct. 31) compared to the group average of +5.4 per cent for that period.

Deans’ Perspective: “Are the bad times over (for the major indices)? I’m willing to bet that the worst is in the rear mirror for those stocks that have been declining. But we don’t concern ourselves too much with what the indices are doing. We tend to get involved in stories at an early stage, before most other people get involved in them.”



FIRST STAR:
* First Quantum Minerals (FM-TSX)
* Recent Price: $3.75.
* 12-Month Range: $2.57-$4.60.
* Snapshot: First Quantum is a mining and metals company involved in the copper and cobalt sectors in Africa. The company recently announced a financing of a minimum $20 million US for the Kansanshi Copper Project in Zambia.
* CEO: Philip Pascal.
* Head Office: Vancouver (8,606 employees).
* Vital Stats: Revenue (last 12 mos), $119.2 million; Profit/Loss (last 12 mos), $33.7 million loss; Market Cap, $163.15 million; Shares Outstanding, 43.51 million.
* Deans’ Comment: “It looks a lot like the nickel story (Lion Ore International, the top holding in the Northwest Specialty Equity Fund) that we’ve talked about before, except this company produces copper. It’s a similar type of company in that it has a rapidly growing production profile with very low production costs. This stock has just jumped about 50 cents which we don’t want to see because we want to buy more. It still looks attractive. We started buying it around $2.20 about a year ago. Looking at the feasibility study, their cost of producing copper will be about 35 cents a pound, which would put them among the lowest-cost producers in the world.”
* Web watch: www.first-quantum.com



SECOND STAR
* CAE Inc. (CAE-TSX)
* Recent Price: $5.58
* 12-Month Range: $3.25-$14.63.
* Snapshot: CAE provides simulation and controls equipment and integrated training solutions for the civic aviation, military and marine markets.
* CEO: Derek Burney.
* Head Office: Toronto (6,000 employees).
* Vital Stats: Current Price/Earnings Ratio, 8.7; Revenue (last 12 mos), $1.2 billion; Profit (last 12 mos), $138.6 million; Market Cap, $1.23 billion; Shares Outstanding 219.54 million; Dividend Yield, 2.15%.
* Deans’ Comment: “This stock was down as low as $3.60 in the last three months. It got knocked down because of concerns over the airline industry, but nevertheless the company will earn roughly 60 cents per share this year. We’ve been able to buy it at an average cost of $4 and change. We still think the company is worth at least $8 a share these days.”
* Web watch: www.cae.com



THIRD STAR
* Aventura (AVR-TSX Venture)
* Recent Price: 0.35.
* 12-Month Range: .23-.50.
* Snapshot: Aventura is an oil and gas company with interests centered in Trinidad and Argentina.
* CEO: J. Scott Price.
* Head Office: Calgary (Three employees).
* Vital Stats: Revenue (last 12 mos), $2.2 million; Profit/Loss (last 12 mos), $500,000; Market Cap,
$67.74 million; Shares Outstanding, 193.55 million.
* Deans’ Comment: “This is a more speculative stock but it’s got lots of sizzle, lots of potential, good people and great assets. Its main asset is a block of property onshore in Trinidad which is a major production area for natural gas. Most of that production is offshore Trinidad, but Aventura is the first to have an onshore natural gas discovery and it’s a major discovery. The market for natural gas there is a fairly substantial petrochemical industry, including methanex.”
“They will be producing 20 million cubic feet a day on a test basis for 12 months and they have an agreement to sell that gas to the Trinidadian government. So you’ve got the potential sizzle with an existing discovery that we think makes the company worth in net asset value about 60 cents a share. You’ve also got the potential upside of additional exploration potential.”
* Web watch: www.aventuraenergy.com
* Deans’ Edge Record (12 picks since Dec/02): +16.7%. Best Pick: Cinram International (CRW-TSX) +136.9%. Worst Pick: Maxim Power (MXG-TSX Venture) -42.5%.
* Disclosure: Deans may hold positions in the featured stocks.