(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 energy strategist with DeltaOne Capital Partners (www.deltaonecapital.com) and is based in Calgary.

A former oil and gas analyst with Research Capital, Linder manages the DeltaOne Energy Fund which boasted a return of about 13 per cent in October, its first month since the fund’s inception (the TSX oil and gas index was down seven per cent for the same period).

The featured stocks are among the top holdings in the fund.

Linder’s Perspective: “I’m particularly bullish towards natural gas and even more bullish than I was three months ago because supply for natural gas continues to fall off and demand is relatively strong. I have the ability to short (sell) stocks in this fund but I’m not shorting anything right now because I’m too bullish right now.

“I believe we’ll end the winter with near-record low levels of gas in storage in both the U.S. and Canada, which will set the stage for very strong prices through 2003. Natural gas drilling remains very depressed and even with a ramp-up in that area next year, it will be too little, too late to save the consumers in 2003. We should see a $5 U.S. NYMEX natural gas price (mcf) by the end of this year with normal winter temperatures (recent price, $3.88 U.S.).”



FIRST STAR
* Thunder Energy (THY-TSX)
* Recent Price: $5.25.
* 12-Month Range: $2.40-$5.50.
* Linder’s 12-month Target: $7.
* Snapshot: Thunder is a junior oil and gas company operating in five core areas of Alberta. It recently released third-quarter results showing a 39-per-cent increase in cash flow to $7.5 million, and a 77-per-cent increase in net income, to $2 million.
* CEO: Douglas Dafoe.
* Head Office: Calgary (9 employees).
* Vital Stats: Current Price/Earnings Ratio, 25.0; Revenue (last 12 mos), $51.1 million; 5-Yr Revenue Growth, 111.2%; Profit (last 12 mos), $8.1 million;
5-Yr Profit Growth, 100%; Market Cap, $162.35 million; Shares Outstanding, 30.92 million.
* Linder’s Comment: “Thunder is predominantly weighted towards natural gas (about 70 per cent), all of it unhedged. It is growing its production by the drill bit by about 25 per cent (annually). It has an asset value of over $6 per share and it is an excellent fit to become a royalty trust.”
* Linder’s Risk Rating: Low.
* Web watch: www.thunderenergy.com



SECOND STAR
* Cequel Energy (CQL-TSX)
* Recent Price: $4.60.
* 12-Month Range: $3.20-$4.80.
* Linder’s 12-month Target: $7.
* Snapshot: Cequel is an oil and gas firm that builds through the acquisition of petroleum and natural gas rights and exploration, development and production of crude petroleum and natural gas in Canada.
* CEO: Donald Archibald.
* Head Office: Calgary (3 employees).
* Vital Stats: Revenue (last 12 mos), $15.7 million; 5-Yr Revenue Growth, 174.5%; Profit/Loss (last 12 mos), $1.6 million loss; Market Cap, $265.54 million; Shares Outstanding, 57.73 million.
* Linder’s Comment: “I like the management, which has an excellent track record of bringing on substantial natural gas production. It’s the former management team of Cypress Energy and they’ve made numerous astute acquisitions that will virtually guarantee strong growth in the foreseeable future. It’s also about 70 per cent weighted towards natural gas.”
* Linder’s Risk Rating: Low.
* Web watch: www.cequelenergy.com



THIRD STAR
* Baytex Energy (BTE-TSX)
* Recent Price: $8.65.
* 12-Month Range: $3-$8.92.
* Linder’s 12-Month Target: $12.
* Snapshot: Baytex is an oil and gas company with operations in three core districts in the Western Canadian Sedimentary Basin.
* CEO: Dale Shwed.
* Head Office: Calgary (143 employees).
* Vital Stats: Revenue (last 12 mos), $336.9
million; 5-Yr Revenue Growth, 43.0%; Profit/Loss (last 12 mos), $109.1 million loss; Market Cap, $455.90 million; Shares Outstanding, 52.71 million.
* Linder’s Comment: “Baytex offers significant value, trading at two times this year’s cash flow per share. It is heavily weighted towards heavy oil but a substantial amount of that is hedged. I also believe that Baytex is setting itself up to be turned into a royalty trust. It is weighted about 70 per cent towards oil and the majority of the oil is heavy oil.”
* Linder’s Risk Rating: Low
* Web watch: www.baytex.ab.ca
* Linder’s Edge Record: +1.0%. Best Pick: Ketch Resources (KER-TSX) +27.5% (includes spinoff Acclaim Energy Trust); Worst Pick: Canadian Natural Resources (CNQ-TSX) -21.8%.
* Disclosure: Linder is restricted from trading shares of companies within the DeltaOne Energy Fund.