By David Pyette
The Globe And Mail
Report on Business
Saturday, January 13, 2007

The Globe's My One and Only stock-picking contest starts 2007 with the biggest number of contestants yet -- a total of 10, including two students -- and a couple of minor rule changes.

Adrian Mastracci, fee-only portfolio manager at KCM Wealth Management in Vancouver, says, "I am looking for a significant stock price move, which also translates into downside risk."

If Felix Cheung of Vancouver's David Thompson Secondary School can follow 2006 champ Jason Snow's lead, this year's pack of pros should be worried. Felix is the winner of the latest Wilfrid Laurier University stock-picking contest for high-school students across the nation.

Like several contestants this year, Felix has dipped into the resource sector and his pick is Connacher Oil and Gas Ltd. (CLL-TSX). Let's hope it advances from its 6-per-cent decline so far this year.

"I picked this stock because I think the oil and natural gas sector will do better this year," the 17-year-old Grade 12 student said. (The previously hot energy sector gained only 1.5 per cent last year.) Felix also cited the company's profit growth potential and management as reasons for his choice.

This year we've opened the invitational contest to stocks trading on the S&P 500 index and the Nasdaq 100 as well as those trading on the Toronto Stock Exchange at $1 or more. All stocks must have a market capitalization of at least $100-million and be held for a year. The results are tabulated on a total-return (dividends included) basis.

University of Alberta fourth-year commerce student Mike Clark has taken advantage of the rule change and chosen Intel Corp. (INTC-Nasdaq) as his pick. "With the world economy and global IT spending continuing to grow, and with 78 per cent of Intel's revenue coming outside the Americas for the third quarter of 2006, the company is in a prime position to take advantage of world economic growth," said Mr. Clark, who is a member of the business school's Prime Program, in which select BCom students manage a real-money stock portfolio.

He also said he expects Intel to win the computer chip price war with rival Advanced Micro Devices (AMD). So far this year, Intel has climbed an impressive 9.3 per cent while AMD has lost 10.3 per cent.

The students are competing with eight pros (listed in alphabetical order) for the coveted Globe Cup, er coffee mug. (It should be said that none of last year's professional contestants eked out a gain in a year when the S&P/TSX composite index climbed 17 per cent on a total-return basis so the stocks do not make the basis for a safe portfolio. In other words, don't try this at home.)

Yola Edwards of Zawadzinski Edwards & Associates has chosen Wi-LAN Inc. (WIN-TSX) for her pick. "The symbol seems appropriate," said the independent market strategist and technical analyst.

Appropriate indeed, the shares of the maker of high-speed wireless broadcasting equipment bolted out of the gates with an astounding 19.4-per-cent gain.

Ms. Edwards points out that Wi-LAN holds key patents in the areas of CDMA, WiFi and WiMax and "Cisco, Fujistu and Nokia are patent licensees. Wi-LAN became instantly profitable upon Nokia's Dec. 4 $15.2-million licensing agreement of Wi-LAN's patent portfolio." Ms. Edwards, a contributor to GlobeinvestorGOLD, noted that the stock hit a low of 55 cents last January after reaching a high of $93.75 in February, 2000.

Calian Technologies Ltd. (CTY-TSX) is the choice of Chris Fernyc, portfolio manager, Bissett Small Cap Fund and Bissett Microcap Fund, and of his co-manager Ralph Lindenblatt. Calian provides technology services to industry and government. The stock is up 3.2 per cent this year.

"We see improving business trends at Calian combined with a very attractive valuation," Mr. Fernyc said. The stock provides "a juicy yield for patient investors, and we expect the dividend to continue to increase."

Peter Grandich, who earned his stripes on Wall Street by predicting both the 1987 crash and the 2000 meltdown, has picked emerging gold producer La Mancha Resources Inc. (LMA-TSX). The editor of the Grandich Letter says La Mancha founder Walter Berukoff "has built a solid reputation as a successful mining entrepreneur, merchant banker, real estate developer and financier. Mr. Berukoff holds the distinction of being the founder of several successful mining companies, including American Eagle, Miramar Mining and Northern Orion Resources." La Mancha has fallen 2.7 per cent in 2007.

Peter Linder, managing director with Calgary's Delta One Capital Partners Inc., has picked Cork Exploration Inc. (CRK-TSX). The Calgary-based company went public last summer. "It is 100 per cent weighted to high-BTU, liquids-rich natural gas," Mr. Linder says. "Its properties are in the very desirable west-central Alberta region (Pembina area). Its production in 2006 will be up about 500 per cent and in 2007 production will rise by well over 100 per cent again." Cork is off 5.9 per cent so far this year.

Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver, has chosen gold miner Nevsun Resources Ltd. (NSU-TSX). Mr. Mastracci said he picked Nevsun as "mad money" and as a play on commodities, "primarily in the gold sector but also some copper and zinc." He describes Nevsun as a small-cap company that has the potential to deliver improved revenue. "I am looking for a significant stock price move, which also translates into downside risk." Nevsun has fallen 5.5 per cent year to date.

Our house player this year is Lisa Oake, co-host, with Marty Cej, of Report on Business Television's Market Morning show. Ms. Oake has picked Tahera Diamond Corp. (TAH-TSX), which operates the Jericho diamond mine in Nunavut.

"I think the stock is oversold," Ms. Oake said. She notes that giant Teck Cominco Ltd. has recently announced a strategic alliance with Tahera and purchased a $30-million stake in the fledgling gem miner. "Tahera also has a marketing and financing agreement with Tiffany, which will buy or market all of the diamonds produced. This is a valuation call. I think one piece of good news could send this stock soaring." Ms. Oake could use that good news as the stock has stumbled 16.7 per cent in 2007.

Jean-François Tardif, who finished in last place in 2006 with his pick of Strongco Income Fund, is hoping for better results from Rally Energy Corp. (RAL-TSX). The Calgary-based company is drilling for oil in Egypt and natural gas in Pakistan. Mr. Tardif, manager of the Sprott Opportunities Hedge Fund, said Rally's production will continue to grow substantially and he expects reserves to double by the end of the year. He also cites Rally as a takeover candidate. The stock is off 11.6 per cent so far this year.

Our final contestant this year is Ben Weld, a sales rep at Raymond James Ltd. in Toronto. Mr. Weld has chosen zinc miner HudBay Minerals Inc. (HBM-TSX). He said the stock is inexpensive with a low price-to-earnings multiple. "Strong company fundamentals and a bullish zinc market makes HBM an easy top pick," he said. The stock is down 2 per cent this year.

They're off and running...

The 11th annual "My One And Only" stock-picking contest

The winner's circle

A chronology of champions

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.