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3 top stock picks from Donville Kent’s Jason Donville

Jason Donville is president and CEO of Donville Kent Asset Management. His focus is on Canadian small caps and financial stocks.

Top picks:

Badger Daylighting Inc.
Calgary-based Badger Daylighting Is North America's largest provider of non-destructive daylighting (potholing) services. The company is a play on North American infrastructure construction and renewal with emphasis on the utility and petroleum sectors. Badger trades on just over 9.3 times 2013 earnings and boasts an ROE of close to 30 per cent. (We recently paid $31.)

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High Liner Foods Inc.
Halifax-based High Liner Foods is emerging as one of Canada's leading fish processing and branded foods company. Over the past five years the company has benefited from both astute acquisitions and strong consumer demand with the result being a strong surge in ROE. Trading on 9.9 times 2013 earnings, we think High Liner is the most undervalued consumer stock on the TSX. (We recently paid $30.)

CGI Group Inc.
Montreal-based CGI Group is one of the largest IT and business-process services firms in the world. CGI trades on just 6.5 times 2013 cash earnings while boasting an ROE of close to 28 per cent. (We recently paid $24.)

Past picks: Jan. 13, 2012

Carfinco Financial Group Inc.
Then: $6.72
Now: $10.58
Total return: +66.19 per cent

Constellation Software Inc.
Then: $83.50
Now: $120.20
Total return: +49.75 per cent

Paladin Labs Inc.
Then: $43.25
Now: $44
Total return: +1.73 per cent

Total return average: +39.22 per cent

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Market outlook:

We expect 2013 to be a fairly quiet (low volatility) year for equity markets but expect the market's returns to exceed the modest returns of the TSX in 2011 and 2012. Global economic growth should be modestly higher in 2013 and equity valuations are reasonable, which support our view that equity markets will rise 10-15 per cent in 2013. An economic rebound in China in 2013 also bodes well for Canada.

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