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

FEATURED PRO: Martin Ferguson is a partner and portfolio manager with Calgary-based Mawer Investment Management (www.mawer.com). He has worked with the firm since 1996.

Ferguson manages the Mawer New Canada Fund, which boasted a return of 23.5 per cent in 2002, outperforming the group average of +1.9 per cent.

Ferguson’s Perspective: “I foresee slow economic growth for the next couple of years as the U.S. consumer fully unwinds his debt position and weans himself from his spending habits. I use the U.S. as a guide because I figure what will happen in the U.S. will happen in Canada and probably the rest of the world.

“With slow economic growth, I see the markets as fairly valued at best and definitely not cheap. Given that outlook, I call for the market to be essentially flat in Canada over the next year in Canada – a zero per cent total return and a -2 per cent return in the U.S.

“I believe the small caps will probably outperform large caps for the third straight year, but don’t expect any huge out-performances.

“Regardless of how the market looks, I always do the same thing. I invest in wealth-creating companies and I try to buy them below their intrinsic value.”



FIRST STAR
* CHC Helicopter (FLY.A-TSX)
* Recent Price: $26.25.
* 12-Month Range: $17.44-$36.05.
* Snapshot: CHC has propelled itself into the world’s leading provider of heavy and medium helicopter services to the global offshore oil and gas industry. It has aircraft operating in 23 countries.
* CEO: Craig Dobbin.
* Head Office: St. John’s, Nfld. (2,537 employees).
* Vital Stats: Current Price/Earnings Ratio, 9.2; Revenue (last 12 mos), $678 million; 5-Yr Revenue Growth, 17.2%; Profit (last 12 mos), $49.9 million; 5-Yr Profit Growth, 20.9%; Market Cap, $447.2 million; Shares Outstanding, 17.72 million; Dividend Yield, 0.79%.
* Ferguson’s View: “This stock has been beaten and battered, but I’m still quite positive on its outlook, its market positioning, its market, its visibility and its valuation. The market has taken it down for two reasons. Firstly, they lost a contract (with BP that accounted for about eight per cent of revenue) in the North Sea to a new entity, but I don’t put much stead in that new entity’s abilities going forward. Secondly, there’s always been a swirl of corporate governance issues concerning the stock. I’m aware of those, and it doesn’t deter my bullishness on the stock right now.”
* Ferguson’s Risk Rating: Medium.
* Web watch: www.chc.ca



SECOND STAR
* Contrans Income Fund (CSS.UN-TSX)
* Recent Price: $9.10.
* 12-Month Range: $8.23-10.60.
* Snapshot: Contrans is a holding company operating in the trucking and school busing business in Eastern Canada and the U.S. through subsidiaries, including Brookville Carriers, Fillion Transportation, Glen Tay Transportation and Laidlaw Carriers.
* CEO: Stan Dunford.
* Head Office: Woodstock, Ont. (900 employees).
*Vital Stats: Revenue (last 12 mos), $223.6 million; 5-Yr Revenue Growth, 13.4%; Profit (last 12 mos), $13.2
million; 5-Yr Profit Growth, 18%; Market Cap, $149.75 million; Shares Outstanding, 16.46 million; Dividend Yield, 6.87%.
* Ferguson’s View: “I’ve owned this for many years, prior to it becoming an income trust. It’s well managed, it has a great business model and it has a reasonable valuation.”
* Ferguson’s Risk Rating: Medium.
* Web watch: www.contrans.ca



THIRD STAR
* FirstService Corp. (FSV-TSX)
* Recent Price: $25.25.
* 12-Month Range: $22.05-41.75.
* Snapshot: FirstService is all about service – property service and business service. The key components of its business are residential property management, security systems and consumer services.
* CEO: Jay Hennick.
* Head Office: Toronto (10,500 employees).
* Vital Stats: Current Price/Earnings Ratio, 12.1; Revenue (last 12 mos), $827.7 million; 5-Yr Revenue Growth, 27.9%; Profit (last 12 mos), $29.0 million; 5-Yr Profit Growth, 32.1%; Market Cap, $333.68 million; Shares Outstanding, 13.22 million.
* Ferguson’s View: “I give this stock a higher risk rating because of their balance sheet, which is somewhat leveraged because they’ve grown through acquisitions. They haven’t done any acquisitions for a while so their balance sheet has a chance to repair. Historically, this company has shown great growth, great fundamentals and great returns. Although they’ve taken on a little more leverage on their balance sheet than I usually like, I think it’s well controlled and they’re very good in acquiring companies, focusing on companies that provide services that are not capital intensive and companies with a recurring revenue.”
* Ferguson’s Risk Rating: High.
* Web watch: www.firstservice.com
* Ferguson’s Record (12 picks in past year): +17.3%. Best Pick: Groupe Laperriere & Verreault (GLV.A-TSX) +38.8%; Worst Pick: Premium Brands (FFF-TSX) -31.4%.
* Disclosure: Mawer partners are restricted from owning individual stocks in their funds, but may hold the stocks indirectly in the funds.