(New Business Edge writer Sasha Konotopetz takes the reins to profile the top stock picks of some of Canada's most accomplished investment pros.)
FEATURED PRO: Fred Pynn is executive vice-president and a portfolio manager with Calgary-based Bissett Investment Management (www.bissett.ca).
Fund Form: The Bissett Canadian Equity-A Fund has a three-year annualized return of 14.8 per cent as compared to the group average of 15.1 per cent over the same period.
Management Expense Ratio: 2.6 per cent.
Pynn's Perspective: "We think the overall backdrop is one of moderating economic growth. That goes for the United States and spills over into Canada and elsewhere in the world. We're seeing high commodity prices taking a bit of a bite (out of economic growth) as well as pretty consistent moves by central banks to tighten monetary policy (by raising interest rates).
"We think global economic growth is slowing and, of course, that's going to impact Canada as well. Going forward, we think that the big gains that we've seen in cyclical sectors and stocks are going to be lessened, just because we don't see the same momentum. Oil and gas still could be an OK place to invest, but you're not going to have the same push that we saw previously when oil went to almost $80 (US per barrel)."
* Finning International Inc. (TSX:FTT)
* Recent Price: $39.91.
* 52-Week Range: $35.26-$42.72.
* Snapshot: An authorized Caterpillar dealer, Finning International sells, rents and services Caterpillar products in Alberta, B.C., Yukon and the Northwest Territories as well as in parts of the United Kingdom and South America.
* CEO: Doug Whitehead.
* Head Office: Vancouver.
* Vital Stats: Current Price/ Earnings Ratio, 18.3; Revenue (last 12 mos), $5 billion; 5-Yr Revenue Growth, 14.5 per cent; Earnings, $195.4 million; 5-Yr Earnings Growth, 17.5 per cent; Market Cap, $3.6 billion; Shares Outstanding, 89.4 million; Dividend Yield, 1.22 per cent.
* Pynn's View: "With the growth in the tarsands and the mining industry, Finning has seen its fleet of installed Caterpillar equipment expand dramatically. Even if there is a falling off in the cyclical markets, Finning is going to benefit from all these trucks and various other pieces of equipment, which are going to require maintenance. There has been a cloud over the stock because their operations in the U.K. have been underperforming, but they have been working very diligently to fix that problem. As the fleet of the equipment matures in both South America and North America, we are likely to see improving sales and earnings as they start to ramp up on the sales and service side."
* Risk Rating: Moderate.
* Web Watch: www.finning.com
* Alliance Atlantis Communications (TSX:AAC.B)
* Recent Price: $38.27.
* 52-Week Range: $28.75-$38.95.
* Snapshot: Alliance Atlantis is a creator and distributor of TV and motion picture entertainment. The company co-produces and distributes the Crime Scene Investigation TV program and also offers Canadians 13 specialty channels. Alliance indirectly holds a 51-per-cent limited partnership interest in the Motion Picture Distribution LP.
* CEO: Phyllis Yaffe.
* Head Office: Toronto.
* Vital Stats: Current Price/Earnings Ratio, 19.8; Revenue, $1.7 billion; 5-Yr Revenue Growth, 41.5 per cent; Earnings, $84.3 million; 5-Yr Earnings Growth, 30.3 per cent; Market Cap, $1.6 billion; Shares Outstanding, 42 million.
* Pynn's View: "The CSI portion of Alliance's business and its broadcasting assets are obviously doing very well, but the Motion Picture Distribution LP Income Fund has been problematic due to management turmoil. The company just announced that they are going to sell that asset. What we expect to see are ongoing debt reductions, which then lowers their interest expense and flows through to the bottom line. They've also been using surplus cash to buy back stock and we would expect more stock to be bought back. We look for continued growth from the rest of the business. We see some potential for consolidation in the broadcasting industry in Canada and this could surface more value if somebody decides to come after (acquire) Alliance Atlantis or (Alliance Atlantis) tries to make a deal."
* Risk Rating: Moderate.
* Web Watch: www.allianceatlantis.com
* Kingsway Financial Services Inc. (TSX:KFS)
* Recent Price: $25.47.
* 52-Week Range: $18.81-$26.96.
* Snapshot: Kingsway Financial Services offers property and casualty insurance, specializing in non-standard automobile and motorcycle insurance for higher-risk clients in Canada and the U.S. Kingsway acquired HI Holdings Inc. in October 2005.
* CEO: William Star.
* Head Office: Mississauga.
* Vital Stats: Current Price/Earnings Ratio, 10; Revenue, $2.1 billion; 5-Yr Revenue Growth, 41.5 per cent; Earnings, $148.5 million; 5-Yr Earnings Growth, 30.3 per cent; Market Cap, $1.4 billion; Shares Outstanding, 56.1 million; Dividend Yield, 0.96 per cent.
* Pynn's View: "This is a really cheap stock that trades at a low price-earnings multiple.
"The company is managing now to reduce its earnings volatility. The company has initiated a dividend. It doesn't have a big yield, but we think that over time the dividend will increase, so there is potential for growth and income. This year, they could have a very good fourth quarter because there haven't been any hurricanes or big weather events. I think that over the next little while you're likely to see very positive earnings comparisons this year compared to last year."
* Risk Rating: Moderate.
* Web Watch: www.kingsway-financial.com Pynn's Edge Record (last 12 mos): +8.8 per cent. Best Pick: Research In Motion (TSX:RIM) +65.3 per cent. Worst Pick: Home Capital Group (TSX:HCG) -19.7 per cent.
Disclosure: Pynn owns shares in the Bissett funds in which the featured stocks are held.
(This feature is provided for information purposes. Investors are advised to do their own research or consult a qualified investment professional before making investment decisions.)