(Every week, Business Edge columnist Gyle Konotopetz profiles the top three stock picks of one of Canada’s top investment pros.)
FEATURED PRO: Josef Schachter is president of Calgary-based investment firm Schachter Asset Management. Schachter’s most recent picks in the Edge five months ago – Nortel Networks, Defiant Energy and BelAir Energy – boast a return of 51 per cent.
Schachter’s Perspective: “I think the market’s very cheap right now and it should improve as progress is made in the war on terrorism. We have very low interest rates, earnings have been better than expected in the first quarter, and as we get the improvement in business confidence combined with an improvement in consumer confidence, the potential for the Dow to be 10,000 (recently 8,594) before year end is a
reasonable target to me.”
* Canadian Superior Energy (SNG-TSX)
* Recent Price: $1.36.
* 52-Week Range: 0.97-$3.41.
* Schachter’s 12-Month Target: $2.50.
* Snapshot: Canadian Superior is an oil and gas company with potential high-impact properties in Western Canada, including East Ladyfern, and has a major stake in offshore Nova Scotia.
* CEO: Greg Noval.
* Head Office: Calgary (48 employees).
* Vital Stats: Revenue (last 12 mos), $7.7 million; 5-Yr Revenue Growth, 102.7%; Profit/Loss (last 12 mos),
$28.2 million loss; Market Cap, $88.44 million; Shares Outstanding, 65 million.
* Schachter’s View: “Canadian Superior has a lot of potential in different areas. You’ve got the Drumheller wells for shallow gas, you’ve got East Ladyfern (a multi-well natural gas field) and you’ve got the East Coast (offshore Nova Scotia) for the big wild card. If that wild card came in, the upside on just the East Coast would be $5.”
* Web watch: www.cansup.com
* Vaquero Energy (VAQ-TSX)
* Recent Price: $1.50.
* 52-Week Range: 0.45-$1.65.
* Schachter’s 12-Month Target: $2.50.
* Snapshot: Vaquero is an oil and gas company focused on several Alberta properties and is weighted towards natural gas.
* CEO: Rob Waldner.
* Head Office: Calgary (10 employees).
* Vital Stats: Current Price/Earnings Ratio, 150.0; Revenue (last 12 mos), $5.1 million; 5-Yr Revenue Growth, -9.3%; Profit (last 12 mos), $200,000; Market Cap, $51.18 million; Shares Outstanding, 34.1 million.
* Schachter’s View: “This company has very good cash flow, a good core area (at Whitecourt, Alta.) and the management team headed by Rob Waldner is very strong and they’ve had a lot of success. They’ve got a new plant that is coming on in September that is going to give them more capacity in terms of moving more gas through.
“This is a stock that I think potentially could reach $2.50 or $3 with moderate risk.”
* Web watch: www.westres.com
* Calpine Energy (CPN-NYSE)
* Recent Price: $4.86 US.
* 52-Week Range: $1.55-$10.65.
* Schachter’s 12-Month Target: $10.
* Snapshot: Calpine is a power company that owns 19 power plants in the Geysers in California, which is the largest geothermal facility in the U.S.; owns interests in 63 natural gas fired plants in Canada, the U.S. and the U.K.; and also owns one trillion cubic feet of proven natural gas reserves.
* CEO: Peter Cartwright.
* Head Office: San Jose, Calif. (3,353 employees).
* Vital Stats (U.S. funds): Current Price/Earnings Ratio, 15.5; Revenue (last 12 mos), $8.5 billion; 5-Yr Revenue Growth, 97.7%; Profit (last 12 mos), $147.0 million; 5-Yr Profit Growth, 18.9%; Market Cap, $7.46 billion; Shares Outstanding, 49.09 million.
* Schachter’s View: “They offer gas systems in Canada and the U.S. and they’re also a big electricity provider. They’ve had the same balance sheet problems everybody has had since the Enron (scandal), but they’re cleaning up their balance sheet. They had a small loss in the first quarter, but they should be profitable by the third quarter.”
* Web watch: www.calpine.com
* Schachter’s Edge Record: +17.2%. Best Pick: Defiant Energy (DEF-TSX) on Dec. 19/02 +87.5%. Worst Pick: Nortel Networks, (NT-TSX) on Jan. 3/02 -59.3%.
* Disclosure: Schachter Asset Management may have funds that hold the featured stocks or have them on the company’s recommendation list.