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

FEATURED PRO: Peter Linder is the Calgary-based oil and gas analyst with Research Capital Corp.

Linder’s Perspective: “I’m heavily leaning towards natural gas (companies heavily weighted in natural gas), and I think we will see a significant runup in natural gas prices. I believe that, as good as it has been in the past, you ain’t seen nothing yet. If we get a normal (cold) winter, I believe the natural price will rise above $4.50 (US mcf).”

Linder’s targets for the commodities this year: $3.60 US mcf for natural gas (recently $3.28); $23 US per barrel for oil (recently $25.27).



FIRST STAR

* Ketch Energy (KCH-TSX)

* Recent Price: $5.29.

* 12-Month Range: $2.95-$7.71.

* Linder’s Call: Strong buy.

* 12-Month Target: $9.

* Snapshot: Ketch, with its acquisition of Post Energy, has become an intermediate-sized oil and gas producer and has effectively doubled its production. The company’s operations are in Alberta, and it is weighted toward natural gas with no heavy oil exposure.

* CEO: Grant Fagerheim.

* Head Office: Calgary (19 employees).

* Vital Stats: Price/Earnings Ratio, 12.9; Revenue (last 12 mos), $118.4 million; 5-Yr Revenue Growth, 79.5%; Profit (last 12 mos), $13.8 million; Market Cap, $221.2 million; Shares Outstanding, 41.8 million.

* Linder’s Comment: “First and foremost, I like the low valuation that Ketch is trading at. It is trading at under three times this year’s cash flow per share. It’s heavily weighted towards natural gas (about 70 per cent), it has significant growth potential, and last but not least, it remains a takeover candidate. It’s my No. 1 takeover target.”

* Linder’s Risk Rating: Low (relative to the oil and gas sector).


SECOND STAR



* Gauntlet Energy (GAU-TSX)

* Recent Price: $9.45.

* 12-Month Range: $2.85-$10.93.

* Linder’s Call: Strong buy.

* 12-Month Target: $20.

* Snapshot: Gauntlet is a junior oil and gas producer with operations focused in Alberta. Its production and reserves are heavily weighted toward natural gas. * CEO: Laurie Sibbald.

* Head Office: Calgary (12 employees).

* Vital Stats: Price/Earnings Ratio, 21.6; Revenue (last 12 mos), $35.3 million; Profit (last 12 mos), $6.6 million; Market Cap, $134.4 million; Shares Outstanding, 14.2 million.

* Linder’s Comment: “I just raised my target price to $20 (on May 23), and that would require a successful winter program again next year. This is a unique company. It has outperformed its peers by about 500 per cent in virtually every respect. It’s over 90-per-cent weighted towards natural gas. It has more than doubled its production growth in the last three years, all via the drill bit. It has increased its proven reserves nine-fold in three years, all via the drill bit. And it has at least seven new drilling locations for next winter in northwestern Alberta and northeastern B.C. That’s the hottest area right now. It’s also a takeover target.”

* Linder’s Risk Rating: Low (relative to oil and gas sector).

THIRD STAR

* Bonavista Petroleum (BNP-TSX)

* Recent Price: $32.50.

* 12-Month Range: $21.75-$35.60



* Linder’s Call: Strong buy.

* 12-Month Target: $45.

* Snapshot: Bonavista is an intermediate Western Canada oil and gas producer with production and reserves weighted toward natural gas.

* CEO: Keith MacPhail.

* Head Office: Calgary (34 employees).

* Vital Stats: Price/Earnings Ratio, 10; Revenue (last 12 mos), $341.3 million; Profit (last 12 mos), $96.2 million; Market Cap, $946.2 million; Shares Outstanding, 29.1 million.

* Linder’s Comment: “Bonavista is probably the best-managed company of its size (mid-tier). It is about 70 per cent weighted towards natural gas and approximately half its growth has been through astute acquisitions which have been very prudent. The company continues to generate significant production growth. It’s probably one of two or three gas-weighted mid-cap producers left standing, so it will get a lot more attention (from investors).”

* Linder’s Risk Rating: Low (relative to the oil and gas sector).

* Disclosure: Linder says he personally owns Ketch Energy and Bonavista Petroleum, and Research Capital has been involved in financing for Gauntlet in the past three months.