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

FEATURED PRO: Danny Deadlock is an independent equity analyst based in Hanna, Alberta, who specializes in small-cap and penny stocks. Deadlock has published the StreetSignal newsletter (www.streetsignal.com) by e-mail subscription since 1995.

Deadlock’s perspective: “We remain in a tight trading range and should remain so until vacation season winds down later this month. For the next six weeks, we’re looking for 9750 for the Dow (five per cent above current levels) but weakness in the techs and Nasdaq in particular.

“We have been fortunate to experience triple-digit gains on almost all our small-cap tech picks this year, but the party may soon be winding down for the fourth quarter. I would use extreme caution in this sector during the month of October.”



FIRST STAR
* True Energy (TUI-TSX)
* Recent Price: $1.10.
* 52-Week Range: .60-$1.20.
* Snapshot: True is a junior oil and gas company focused on exploration and production in west-central Saskatchewan and west-central Alberta. Production is weighted approximately 60 per cent toward natural gas.
* CEO: Paul Baay.
* Head Office: Calgary (25 employees).
* Vital Stats: Current Price Earnings Ratio, 18.0; Revenue (last 12 mos), $25.1 million; 5-Yr Revenue Growth, 848.8%; Net Profit (last 12 mos), $2.5 million; Market Cap, $49.63 million; Shares Outstanding, 45.12 million.
* Deadlock’s View: “This is a very well-run junior
producer with excellent exposure to a natural gas
sector that is expected to be very strong this winter. During the first six months of 2003, the company has been hitting 100-per-cent success rates on drilling – highly abnormal.
“True Energy has approximately 200,000 acres of undeveloped land and with such a high success rate on drilling, this could lead to tremendous production and cash-flow growth over the next 12 to 18 months.”
* Risk Comment: “There are commodity price risks, but the company is heavily weighted in natural gas which should continue to see very strong demand for the foreseeable future.”
* Web watch: www.trueenergy.ca



SECOND STAR
* International Road Dynamics (IRD-TSX)
* Recent Price: $1.15.
* 52-Week Range: .89-$1.40.
* Snapshot: IRD is a multi-discipline technology company with expertise in solving unique and challenging transportation problems.
* CEO: Terry Bergan.
* Head Office: Saskatoon, Sask. (190 employees).
* Vital Stats: Current Price/Earnings Ratio, 29.2; Revenue (last 12 mos), $27.0 million; 5-Yr Revenue Growth, 7.0%; Net Profit (last 12 mos), $500,000; Market Cap, $15.57 million; Shares Outstanding, 13.54 million; Net Cash (to end of March), approx.
$45 million.
* Deadlock’s View: “With a recent acquisition from a defence manufacturer in Germany, IRD has expanded its annual revenue by almost 50 per cent overnight at little cost.
“We expect this acquisition to add significantly to the bottom line within 12 months. The company is well funded with little debt and trades only marginally above cash value. They’re now a world leader in this niche market and it’s an excellent low-risk, small-cap speculation if you have some patience.”
* Risk Comment: “It is general market risk more than anything.”
* Web watch: www.ird.ca



THIRD STAR

* Cotelligent Inc. (CGZT-U.S. OTCBB)
* Recent Price: .24 U.S.
* 52-Week Range: .10-.62.
* Snapshot: Cotelligent is a technology services company that develops customized business applications with an emphasis on mobile technologies and Internet applications.
* CEO: James Lavelle.
* Head Office: Irvine, CA.
* Vital Stats (U.S. funds): Annual Revenue, approx. $10 million; Quarterly Cash Burn, approx. $2.5 million; Market Cap, $3.62 million; Shares Outstanding, 15.07 million; Estimated Net Cash (to end of June), $10 million.
* Deadlock’s View: “Over the next few years, analysts are forecasting significant growth in wireless computing that allows mobile users to easily access the Internet from airports, restaurants, hotels, etc. Security concerns have slowed a fast roll-out but companies like IBM are introducing technology that may alleviate many concerns. “Cotelligent is one of the consulting leaders in this field and one of only 10 IBM partners certified to develop applications for IBM’s new Websphere Everyplace Access (WEA) platform.”
* Risk Comment: “This company is still dependent on an overall recovery in the economy. They will also need to control cash-burn rates while still expanding sales efforts.”
* Web watch: www.cotelligent.com
* Deadlock’s Edge Record (six picks since January): +61.5%. Best Pick: Marimba (MRBA-Nasdaq) +129.1%. Worst Pick: Mainframe Entertainment (MFE-TSX) +3.0%.
* Disclosure: Deadlock says he is not compensated in any form by companies he reports on and personally holds small positions in the featured stocks.