(Business Edge columnist Gyle Konotopetz regularly profiles the top three stock picks of some of Canada’s most accomplished investment pros).

FEATURED PRO: Fred Pynn is vice-president of Calgary-based Bissett Investment Management (www.franklintempleton.com/ bissett).

Pynn manages the Bissett Canadian Equity Fund, which has a three-year annualized return of four per cent compared to the group average of 2.6 per cent. The fund’s 12-month return is 23.4 per cent (group average 25.5 per cent). Management Expense Ratio (MER): 2.46 per cent.

Pynn’s Perspective: “I think the market will be choppy over the summer. We’ve got people worried about interest rates, we’ve got people worried about oil prices, we’ve got people worried about the Middle East and we’ve got people worried about the U.S. election. But once we get some of these things put behind us, I think we’re set up late in the year to have a good market.

“I think the market will do better after the traditional weak period, based on the fact that the economy is doing well in North America and corporate profits are also doing well.

“Right now, people are focused on the negatives. They’re saying interests are going to go up, but that’s because the economy is doing well. They’re saying oil prices are high, but that’s because demand is up because the economy is doing well.

“We’re interested in buying stocks – we’re not buying the economy – and we’re finding lots of companies to invest in and these three companies are good examples of that.”



First Star
* Gildan Activewear (GIL.A)
* Recent Price: $37.41.
* 52-Week Range: $34.01-$44.90.
* Snapshot: Gildan manufactures and markets premium quality basic activewear such as T-shirts for sale principally in the imprinted activewear segment of the Canadian, U.S., European and other international markets.
* Co-CEOs: Gregory Chamandy, Glenn Chamandy.
* Head Office: Montreal.
* Vital Stats: Current Price/Earnings Ratio, 15.0; Revenue (last 12 mos) $640.7 million; 5-Yr Revenue Growth, 16.3 per cent; Earnings (last 12 mos), $73.5 million; 5-Yr Revenue Growth, 20.3 per cent; Market Cap, $1.33 billion; Shares Outstanding, 35.61 million.
* Pynn’s View: “This stock was looking a little beaten up when one of the two major shareholders sold their stock but we think it’s a good time to buy. The other major shareholders are still actively involved in managing the business.
“We still think they can grow their business at 15 to 20 per cent per year by continuing to focus on T-shirts (manufacturing) and continuing to grow in other areas like golfwear and fleecewear. They’ve been expanding their manufacturing facilities. Several years ago, they built a plant in Honduras to take advantage of U.S. trade rules with respect to textiles and clothing, and now they’re building another plant in the Dominican Republic.”
* Pynn’s Risk Rating: Medium.
* Web Watch: www.gildan.com



Second Star
* Bank of Nova Scotia (BNS-TSX)
* Recent Price: $35.08.
* 52-Week Range: $29.18-$37.45.
* Snapshot: Scotia is one of Canada’s biggest financial institutions and its most international. It provides deposit and lending services to households and small and medium businesses, wealth management services to individuals, brokerage services and corporate debt and equity underwriting services to large organizations.
* CEO: Richard Waugh.
* Head Office: Toronto.
* Vital Stats: Current Price/Earnings Ratio, 13.6; Revenue (last 12 mos), $16.9 billion; 5-Yr Revenue Growth, 0.9 per cent; Earnings (last 12 mos), $2.6 billion; 5-Yr Earnings Growth, 9.7 per cent; Market Cap, $35.38 billion; Shares Outstanding, one billion; Dividend Yield, 3.4 per cent.
* Pynn’s View: “We like the financial services, it’s a high-quality sector and Scotia, which has a long history of profit- ability, just reported another excellent quarter. Profitability, after you stripped out some gains, was up 20 per cent and they also raised their dividend by 20 per cent.
“We think the shares are very attractively valued and you’ve got a 3.4-per-cent dividend yield. You can look for steady dividend growth in the future and we still believe they’re going to be able to grow earnings. We don’t know if it’ll be able to grow them at 20 per cent but there will probably be 10-to 15-per-cent earnings growth with similar dividend growth over the next several years.”
* Pynn’s Risk Rating: Low.
* Web Watch: www.scotia.ca



Third Star
* Axcan Pharma (AXP-TSX)
* Recent Price: $26.65.
* 52-Week Range: $16.35-$27.48.
* Snapshot: Axcan develops and manufactures drugs for treatment of bowel diseases, liver diseases and stomach infections. The company also distributes pharmaceutical, medical and nutritional products for treatment of cystic fibrosis, HIV/AIDS, gastroenterology and oncology.
* CEO: Léon Gosselin.
* Head Office: Mont-Saint-Hilaire, Que.
* Vital Stats: Current Price/Earnings Ratio, 34.8; Revenue (last 12 mos), $286.2 million; 5-Yr Revenue Growth, 35.5 per cent; Earnings (last 12 mos), $35.7 million; 5-Yr Earnings Growth, 62.1 per cent; Market Cap, $1.21 billion; Shares Outstanding, 45.33 million.
* Pynn’s View: “This company specializes in gastro- intestinal prescription drugs and is very focused on this market niche. They’ve grown by developing some of their own drugs but they’ve also been very active in buying drugs from major drug manufacturers.
“This company has been growing at 20 per cent plus and it trades at about the market multiple so it’s not particularly expensive. Longer term, they are in Phase III (final phase) trials with a drug that probably has $500 million to $1 billion in sales potential in the U.S. This drug may work and it may not work but there’s huge upside potential going forward.”
* Pynn’s Risk Rating: High.
* Web Watch: www.axcan.com

Pynn’s Edge Record (past 12 mos): -0.6 per cent. Best Pick: Speedware (SPW-TSX) +15.1 per cent. Worst Pick: Alimentation Couche-Tard (ATD.B-TSX) -6.9 per cent.

Disclosure: Pynn may own shares in the Bissett Canadian Equity Fund in which the featured stocks are held.