FEATURED PRO: Randy Oliver is president and portfolio manager of Hesperian Capital Management (www.hesperiancapital.com). The firm manages the Norrep series of funds. Oliver is the winner of Business Edge's fourth annual stock-picking derby based on his 2005 picks for this feature, which returned 46.8 per cent.

Fund Form: The Norrep fund has a one-year return of 38.1 per cent, compared to the group average of 19.9 per cent and a five-year compound annualized return of 27.1 per cent, compared to the group average of 9.8 per cent.

Oliver's Perspective: "I think we can continue to do well with the smaller-cap stocks, but they may not perform well as a group.

We recently looked at 800 companies and 65 per cent of the small-cap companies were in the bottom third in terms of attractiveness."

Randy Oliver

Oliver's 2006 Outlook: "We're finding value in a number of stocks in the industrial and IT (information technology) areas right now and that's where we expect the strength to be. We also think the valuations in the mining sector are very low, especially when you compare them to the much higher valuations in the oil and gas sector. It won't be long before people who are buying oil and gas say, 'My gosh, this nickel play is very cheap.' I think there might be an overflow of investment from the oil and gas sector into the mining companies - not the raw exploration companies but those that have assets in the ground."

First Star

* Century II Holdings Inc. (TSX:CH)

* Recent Price: $4.

* 52-Week Range: $0.83-$4.25.

* Snapshot: Century II operates a subsidiary known as ICS Courier that operates a fixed-route carrier business serving more than 35,000 Canadian customers in the insurance, financial, travel, optical and dental sectors.

* CEO: Geoff Davies.

* Head Office: Toronto.

* Vital Stats: Revenue (last 12 mos), $79.8 million; 5-Yr Revenue Growth, -5.8 per cent; Earnings (last 12 mos), $600,000; Market Cap, $45.73 million; Shares Outstanding, 11.43 million.

* Oliver's View: "We started buying this stock at about $1.80. It has wonderful metrics in terms of its balance sheet and revenue growth. It is trading at about 10 times this year's earnings and has an eight-per-cent return on equity. We like the business model. They're involved in a very specialized courier business that's called fixed-route courier."

* Oliver's Risk Rating: Medium.

* Web Watch: www.centuryiiholdings.com

Second Star

* Computer Modelling Group (TSX:CMG)

* Recent Price: $6.90.

* 52-Week Range: $4.10-$8.50.

* Snapshot: Computer Modelling Group develops and sells reservoir simulation software designed to determine reserves capacity and maximize potential recovery for oil and gas companies.

* CEO: Kenneth Dedeluk.

* Head Office: Calgary.

* Vital Stats: Current Price/Earnings Ratio, 16; Revenue (last 12 mos), $16.48 million; Earnings (last 12 mos), $3.88 million; Market Cap, $54.2 million; Shares Outstanding, 7.87 million; Dividend Yield, 2.35 per cent.

* Oliver's View: "This is a computer software firm that does both consulting and engineering for the oil and gas industry. They do a computer model of energy reserves to allow for a better harvest of those reserves. The stock has been going upward for about three years, but it's still trading at about 14 times its earnings. As we think things are going to stay strong in the oil and gas sector, this company looks attractive with its inexpensive valuation."

* Oliver's Risk Rating: Medium to high.

* Web Watch: www.cmgl.ca

Third Star

* Strongco Income Fund (TSX:SQP.UN)

* Recent Price: $14.55.

* 52-Week Range: $13-$16.25.

* Snapshot: Strongco sells, rents and services mobile industrial equipment through 23 outlets across Canada, primarily serving the mining, oil and gas, forestry, utilities, construction and road-building sectors.

* CEO: Robin MacLean.

* Head Office: Mississauga, Ont.

* Vital Stats: Price/Earnings Ratio, 12.5; Revenue (last 12 mos), $389 million; 5-Yr Revenue Growth, -6.2 per cent; Earnings (last 12 mos), $11.1 million; Market Cap, $146.1 million; Shares Outstanding, 10 million; Monthly Cash Distribution, 15 cents per unit; Yield, 11.3 per cent.

* Oliver's View: "This stock remains inexpensive. Although Strongco's earnings are growing, the market doesn't seem to believe that they're going to continue growing their earnings. As long as there is strength in the natural resource area, in mining, forest products, and oil and gas, these guys will continue to do extremely well. We think this stock is mispriced by as much as $4."

* Oliver's Risk Rating: Low to medium.

* Web Watch: www.strongco.com

Oliver's Edge Record (2005): +46.8 per cent. Best Pick: PetroBank Energy (TSX: PBG) +262.1 per cent. Worst Pick: Strongco Income Fund (TSX:SQP.UN) -4.5 per cent.

Disclosure: Oliver owns shares in the Norrep 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.)