(Every week, Business Edge columnist Gyle Konotopetz profiles the top three stock picks of one of Canada’s most accomplished investment pros.)

FEATURED PRO: Martin Ferguson has been a partner and portfolio manager with Calgary-based Mawer Investment Management (www.mawer.com) since 1996.

The featured stocks are held in the small-cap New Canada Fund that boasts a return of 40.1 per cent in the past 12 months compared to the group average of +9.7 per cent.

Ferguson’s Perspective: “Warren Buffett (the renowned investor who is president of Berkshire Hathaway) and myself both love bear markets because it gives us an opportunity to buy good companies at a low price.

“However, I’m not saying I’m operating worry-free. Bear markets do give you opportunities, but with the market being down as much as it is, it may be foreshadowing events that would be untoward in the economy. I continue to do my work bottom-up and the evaluations are there, even assuming a lot of scenarios that
encompass, basically, a poor economy. But when you’re at extremes, which we appear to be at now, there’s never certainty. There’s always risk.”



FIRST STAR
* Groupe Laperriere & Verreault (GLV.A-TSX)
* Recent Price: $12.25.
* 12-Month Range: $8.11-$13.78.
* Snapshot: GL&V is a global leader in the design, manufacture and service of engineered equipment in pulp and paper production and in liquid/solid separation processes. The company also serves other industries such as mining, chemicals and food, energy and environment, tapping markets in 40 countries.
* CEO: Laurent Verreault.
* Head Office: Montreal (1,200 employees).
* Vital Stats: Current Price/Earnings Ratio, 10.6; Revenue (last 12 mos), $331.4 million; Profit (last 12 mos), $11.19 million; Market Cap, $86.52 million; Shares Outstanding, 6.89 million; Dividend Yield, 1.59 per cent.
* Ferguson’s Comment: “They have been growing through acquisition and just completed an acquisition in the past month (Eimco, a division of Baker Hughes specializing in solid/liquid separation processes). That will give the company about a 50-per-cent market share in liquid-solid separation equipment sales. The stock is trading at about 10 times the street’s expectations for next year’s earnings. It has good management. The risk, of course, is capital spending by industries.”
* Ferguson’s Risk Rating: Medium.
* Web watch: www.glv.com



SECOND STAR
* Home Capital Group (HCG.A-TSX)
* Recent Price: $11.50.
* 12-Month Range: $7.80-$15.60.
* Snapshot: Home Capital is a holding company that provides financial services such as mortgage lending and credit card issuing through its subsidiary, Home Trust Company. Home Trust targets niche markets in Alberta, B.C. and Ontario that are not serviced by major institutions.
* CEO: Gerald Soloway.
* Head Office: Toronto (80 employees).
* Vital Stats: Current Price/Earnings Ratio, 11.2; Revenue (last 12 mos), $101.68 million; 5-Yr Revenue Growth, 24.9 per cent; Profit (last 12 mos), $17.9
million; Market Cap, $153.21 million; Shares Outstanding, 13.3 million; Dividend Yield, one per cent.
* Ferguson’s Comment: “This company has a very, very solid balance sheet and has great returns compared to all its peers in the financial sector. They have a great return on investment and return on equity and they’ve done it with a high degree of capital and solid assets. The risk on this one is the housing market.”
* Risk Rating: Medium.
* Web watch: www.homecapital.com



THIRD STAR
* BW Technologies (BWT-TSX)
* Recent Price: $18.25.
* 12-Month Range: $9.25-$22.10.
* Snapshot: BW designs, manufactures and markets gas-detection instruments that protect people and their work facilities from dangerous gases. BW recently beefed up its market share with the purchase of privately held Quebec-based Vulcain Alarm for $7,850,000.
* CEO: Cody Slater.
* Head Office: Calgary.
* Vital Stats: Current Price/Earnings Ratio, 22.3; Revenue (last 12 mos), $40.1 million; Profit (last 12 mos), $5 million; Market Cap, $105.17 million; Shares Outstanding, 5.8 million.
* Ferguson’s Comment: “I like the acquisition they’ve just made in acquiring a profitable company (Vulcain Alarm) in the fixed (gas) detection side. The stock has come off and they’ve also seen a little weakness in their results with year-to-growth slowing a bit, but still they’re growing market share in a growing industry. The risks are in integration, the pace of industry growth and you might argue that there’s a valuation risk because of the way the stock has held up where others haven’t.”
* Risk Rating: Medium.
* Web watch: www.gasmonitors.com
* Ferguson’s Record (nine picks since Jan. 17): +10.4%. Best pick: CHC Helicopter (FLY.A-TSX) + 54.5%. Worst Pick: Premium Brands (FFF-TSX) -16.1%.
* Disclosure: Mawer partners are restricting from owning individual stocks in their funds, but may hold the stocks indirectly in the funds.