(Each week, Business Edge writer Gyle Konotopetz profiles the top three stock picks of one of Canada’s most successful investment pros.)

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Fred Pynn, senior vice-president and portfolio manager, Calgary-based Bissett Investment Management.

Pynn’s Current Strategy: “We still anticipate that there will be an economic recovery. That’s still predicated on the low-interest-rate policy by the Bank of Canada and the U.S. Federal Reserve board.

“Our view is that the economic recovery will start in the first half of 2002, but we think the recovery will perhaps not be as robust as investors are anticipating. Some people are talking about a V-shaped recovery where you hit bottom and come roaring back. We tend to think it’s going to be more of a U-shaped or even saucer-shaped recovery where it’s a slower recovery.

“We also think the stock market is quite expensive when you look at most valuation measures, which indicates investors have already anticipated a strong economic recovery. At this stage of the game, if we have a slow recovery, we could see continued market volatility and a consolidation or correction phase at some point here. I think it’s going to require patience from investors.”

(The following stocks are in the Bissett Canadian Equity Fund, which Pynn manages).



FIRST STAR

* Power Financial (PWF-TSE)

* Recent Price: $38.25.

* Year Range: $29.50-$39.33.

* Snapshot: Power, incorporated in 1925, is a diversified management and holding company with holdings in leading financial services companies and the communications sector. Its principal subsidiaries are Power Financial Corp., Power Technology Investment Corp. and Gesca Ltee. Other subsidiaries include Great-West Lifeco, Investors Group and London Insurance Group.

* Co-CEOs: Paul Desmarais Jr. and Andre Desmarais.

* Head Office: Montreal (15,500 employees).

* Vital Stats: Current Price/Earnings Ratio, 12.7; Revenue (last 12 mos), $18.4 billion; 5-Yr Revenue Growth, 21.8%; Profit (last 12 mos), $675 million; 5-Yr Profit Growth, 20.9%; Market Cap, $7.52 billion; Shares Outstanding, 196.7 million; Dividend Yield, 1.8%.

* Pynn’s Comment: “The financials group is attractive to us because, in contrast to the market, financial services stocks aren’t very expensive and you also get some dividend yield. Power, a long-term holding of ours, gives you exposure in the life-insurance sector through Great-West Lifeco and the mutual-fund sector through Investors Group. They have a long track record of consistent earnings and dividend growth. If the market does get a little shaky, this is sort of defensive, a good store of value and will perform well in either a poor environment or if the market starts to move up again.”

* Pynn’s Risk Rating: Low.

* Web watch: www.powerfinancial.com



SECOND STAR

* Alimentation Couche-Tard (ATD.B-TSE)

* Recent Price: $24.89.

* Year Range: $8.75-$26.10.

* Snapshot: The company operates a network of convenience stores in Canada under the names of Mac’s, Couche-Tard, Provi-Soir, Winks, Sept Jours, Mike’s Mart and Beckers as well as Bigfoot in the U.S.

* CEO: Alain Bouchard.

* Head Office: Laval, Que.

* Vital Stats: Current Price/Earnings Ratio, 25; Revenue (last 12 mos), $2 billion; Profit (last 12 mos), $36.9 million; Market Cap, $672.4 million; Shares Outstanding, 27 million.

* Pynn’s Comment: “They are the largest operator of convenience stores in Canada, including Mac’s in Western Canada. They dominate the business but are continuing to expand, doing store renovations that add to volume and improve their profitability. The big thrust is that they’ve started to expand in the U.S. The convenience-store industry in the U.S. is huge, very fragmented, and because they have superior merchandising techniques in terms of store layout we see a lot of long-term potential in the U.S. market.”

* Pynn’s Risk Rating: Medium.

* Web watch: www.couche-tard.com



THIRD STAR

* Magna International (MG.A-TSE)

* Recent Price: $99.04.

* Year Range: $61.90-$111.85.

* Snapshot: Magna is an auto-parts giant that designs, develops and manufactures automobile systems and components. The company also engineers and assembles complete vehicles, primarily for sale to original equipment manufacturers of vehicles in North America, South America, Mexico and Europe.

* CEO: Belinda Stronach.

* Head Office: Aurora, Ont. (61,711 employees).

* Vital Stats: Current Price/Earnings Ratio, 9.7; Revenue (last 12 mos), $17.1 billion; 5-Yr Revenue Growth, 19%; Profit (last 12 mos), $893 million; 5-Yr Profit Growth, 7.2%; Market Cap, $8.15 billion; Shares Outstanding, 82.2 million; Dividend Yield, 2.2%.

* Pynn’s Comment: “We think it’s a good time to buy this stock because they’ve just had a management change (with Belinda Stronach taking over as CEO and James Nicol resigning as president and COO), which has caused the stock to get beaten up. We think the company has excellent long-term contracts within the automobile industry. Right now, they have particularly good contracts with General Motors, supplying a lot of parts with respect to GM’s truck business. GM’s truck business is doing very well. They also have a strong presence in Europe where they’re getting into full-vehicle assembly. This is another stock that is fairly inexpensive. We believe there will be good earnings growth longer term, we think their revenues and earnings will continue to grow as a result of all their contracts and you also get a bit of dividend.”

* Pynn’s Risk Rating: Medium.

* Web watch: www.magnaint.com

* Pynn’s Record (with Oct. 25 picks): +32% (CAE +49%, Saputo +24%, CN Rail +23%).

* Disclosure: Pynn does not directly own any of the stocks although he may hold them in the Bissett Canadian Equity Fund.