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

FEATURED PRO: Evan Spiropoulos is chief financial officer and portfolio manager with Calgary-based Hesperian Capital Management, which manages the Norrep small-cap funds.

Fund Form: The Norrep Fund is up 39.6 per cent and the Norrep II Fund is up 43.8 per cent in the past 12 months. The one-year group average for those funds is 21.2 per cent.

Management Expense Ratios: Norrep Fund, 2.53 per cent; Norrep II Fund, two per cent.

Website:
www.hesperiancapital.com

Spiropoulos’s Perspective: “The market looks pretty toppy to me right now. I see a lot of companies trading at numbers that we saw in 1999 and 2000, but that’s what happens when you have a rally in a bear market. The names that rally first are the ones that capitulate first and that’s when the real damage is done. There’s still some value in the market when you move down the food chain in the industrial and consumer sectors, but I think it’s limited and the market needs to take a breather.”



FIRST STAR
* Russel Metals (RUS-TSX)
* Recent Price: $6.78.
* 52-Week Range: $4.65-$7.
* Snapshot: Russel is a metal distribution company operating in three segments – general line service centre distribution; energy sector pipe, tube, valve and fitting distribution; and import/export distribution.
* CEO: Edward Siegel.
* Head Office: Mississauga, Ont. (1,924 employees).
* Vital Stats: Current Price/Earnings Ratio, 18.3; Revenue (last 12 mos), $1.5 billion; 5-Yr Revenue Growth, -3.6%; Earnings (last 12 mos), $17.5 million; 5-Yr Earnings Growth, -10.6%; Market Cap, $258.88 million; Shares Outstanding, 38.18 million; Dividend Yield, 4.7%.
* Spiropoulos’s View: “This past summer, Russel bought their main competitor (Leroux Steel) and now the company has a dominant market share in Canada. We think that’s going to lead to pretty good synergies and cost savings, which will lead, of course, to the bottom line. It looks like a pretty good story and it also has a nice yield (4.7 per cent). The biggest risk to this company is if the currency stays high or goes higher. It actually is a short-term benefit to their income line, but hurts their end customers, which are construction people.”
* Spiropoulos’s Risk Rating: Medium.
* Web Watch: www.russelmetals.com



SECOND STAR
* Rio Narcea Mines (RNG-TSX)
* Recent Price: $3.45.
* 52-Week Range: $1.41-$3.65.
* Snapshot: Rio Narcea is a gold producer with properties in Spain and Portugal and also has the diversity of nickel mining prospects in Spain.
* CEO: Alberto Lavandeira.
* Head Office: Bajo Salas Asturias, Spain (155 employees).
* Vital Stats: Current Price/Earnings Ratio, 36.5; Revenue (last 12 mos), $93.4 million; 5-Yr Revenue Growth, 38.6%; Earnings (last 12 mos), $8.8 million; Market Cap, $327.28 million; Shares Outstanding, 94.86 million.
* Spiropoulos’s View: “Rio Narcea has gold properties, but we did not buy it for the gold properties. We bought it because they’re going to open a new nickel mine in Spain in the fourth quarter of ’04. We’re kind of indifferent to neutral on gold, but we like nickel very much. This company is now being led by the hand by the gold analysts and trying to be passed off to the base metals analysts who don’t like covering stocks that are in both (gold and base metals). So I think the evaluation is inappropriate. It should be higher. The fact that they’re bringing on a nickel mine lowers the risk level quite a bit.”
* Spiropoulos’s Risk Rating: High.
* Web Watch: www.rionarcea.com



THIRD STAR
* Intertape Polymer (ITP-TSX)
* Recent Price: $11.
* 52-Week Range: $4.50-$12.25.
* Snapshot: Intertape manufactures specialized plastic packaging products and systems for industrial and retail markets.
* CEO: Melbourne Yull.
* Head Office: St. Laurent, Que. (2,700 employees).
* Vital Stats: Revenue (last 12 mos), $904.6 million; 5-Yr Revenue Growth, 12.5%; Earnings/Loss (last 12 mos), $87.4 million Loss; Market Cap, $369.53 million; Shares Outstanding, 33.59 million.
* Spiropoulos’s View: “This company is very closely tied to the economy, making packaging materials like tape, and I think the economy, unlike the stock market, is in the early stages of a recovery. You want to buy stocks that are tied to the economy. About a year and a half ago, they bought a competitor, got a little too much debt on the balance sheet and they were hit by a slowdown in the economy. It was like a perfect storm for them. However, they’ve worked their debt down, they have a very solid management team and I’m paying what I believe is not very much for this story. I’m paying a little less than book value, whereas their competitors trade at around two times book value.”
* Spiropoulos’s Risk Rating: Medium.
* Web Watch: www.intertapepolymer.com
* Spiropoulos’s Edge Record (6 picks): +27.4%. Best Pick: Major Drilling Group (MDI-TSX) +63.6%; Worst Pick: Cinram International (CRW-TSX) +2.4%.
n Disclosure: Spiropoulos owns shares in the Norrep funds, but does not own the individual stocks that are featured.