July 26, 2002

AltaGas Services Inc. (ALA on TSX), Calgary, AB, tel: (403) 691-7575, Price: July 26/02: $9.50, 52-week range: $11.00-5.35. This is the first mention of the company in this newsletter. The company has three operating divisions: 1) midstream operations consisting of gathering and processing natural gas and the associated natural gas liquids and the extracted ethane; 2) natural gas distribution through AltaGas Utilities Inc. and a one-third interest in Inuvik Gas Ltd.; 3) the wholesale marketing of natural gas and electrical power. Within the latter division, AltaGas and TransCanada Energy each own 50% of the 706-megawatt Sundance B Power plant, the largest coal-fired power plant in western Canada. The company recently raised $51.5 million through an equity offering priced at $9.30/sh and in which Enbridge Inc. (ENB on TSX) participated, maintaining its 42% share ownership in the company. AltaGas has a good growth record with share earnings having increased at an annual rate of 16% between 1997 and 2001. Earnings are projected at 75 cents/sh this year, compared with 47 cents/sh in 2001 and are estimated at $1.00/sh for 2003. There are 45.9 million shares outstanding on a fully diluted basis. Debt stands at about 50% of total capitalization. The current dividend is 6 cents/sh each quarter. There are a number of midstream operations becoming available both in Canada as well as in the US as a result of rationalization. AltaGas could very well be involved in acquiring some of these, adding to the growth potential. At the current trading price, the shares trade at 12.6 times this years earnings to yield 2.5% on the 24 cents dividend.

Christopher & Banks Corporation (CBK on NYSE), Plymouth, MN, Tel: (763) 551-5000. Price: July 26/02: $34.20, 52-week range: $44.80-14.81. Last mention of the company in this newsletter was at $40.02 on July 4/02 and first mention was at $7.29 on April 8/00, adjusted for splits. The company's stock is now listed on the NYSE. The share price has tumbled along with most other stocks over the last 3 weeks and now provides a buying opportunity.

EnCana Corporation (ECA on TSX and NYSE), Calgary, AB, tel: (403) 290-2020, price: July 26/02: $42.40, 52-week range: $51.00-35.01. Last mention of the company in this newsletter was at $45.79 on April 15/02 and first mention was at $36.50 on Aug 31/01. EnCana reported strong results for the 2Q with cash flow of $938 million, or $2.00/sh. This brings results for the first 6 months to $1.7 billion of cash flow, or $3.57/sh. Fortunately, commodity prices were higher, since production was down a bit during the recent quarter, averaging 693,104 boe/d, compared with 700,846 boe/d in 1Q. The company is on target to generate cash flow for this year at $7.50/sh. EnCana has been encountering success in the North Sea and also in the Gulf of Mexico and has boosted its capital-spending budget by $1.2 billion to $5 billion. To help accommodate this increase, it has decided to put up for sale $1.5 billion of assets, consisting of both upstream and midstream operations. Cash flow next year could be as much as $9.50/sh. Assigning a 6 x multiple to this produces a share price of $57.

Equatorial Energy Inc. (OZ on TSX), Calgary AB, tel: (403) 264-9562. Price: July 26/02: $2.10, 52-week range: $3.30-1.55. Last mention of the company in this newsletter was at $2.03 on Nov 23/01. Since that time, the company has been busy from a corporate viewpoint. In June, it acquired privately held Resolute Energy Corporation on the basis of 1.85 shares for each of Resolute's 14,580,000 shares outstanding. This involved, therefore, issuing, a total of 27 million shares. Since OZ had outstanding 30.4 million shares, the transaction was not considered a reverse, but more of the friendly variety. Resolute had been recently created by former officers of Tethys Energy and Crestar Energy, both companies that had been taken over during the boom days of high O&G evaluations. The principles had raised $55.3 million from venture capital funds, so that now, out of 59 million shares out, ARC Energy Venture Fund controls 9.1 million shares, or 15.4% of the company, and both a subsidiary of Manulife (MFC on TSX) and RBC Capital Partners, a sub of Royal Bank (RY on TSX) each control 7.9 million shares, or 13.3%. Using the cash, the new management eliminated the unfavourable hedging contracts at a cost of $15.2 million and paid down some debt so that it now stands at $13 million, the equivalent of half a year's anticipated cash flow. With the improved balance sheet, the company expects to obtain a bank line credit of $50 million. A name change to Resolute is in the works. 2Q results should be forthcoming in mid-August. 1Q results showed good production levels at 8,000 bbl/d of oil & NGL and when combined to natural gas production averaging 20.4Mmcf/d, the result was production averaging 11,287 boe/d. Most of the production was from Indonesia, which new management has gone on record to say they would like to dispose of this if the price is right.

Fairmont Hotels & Resorts Inc. (FHR on TSE and NYSE), Toronto ON, Tel: 1-866-627-0642, price: July 26/02: $37.20, 52-week range: $49.50-20.49. Last mention of the company in this newsletter was at $46.14 on April 15/02 when described as being fully valued, then trading at 30 times optimistic earnings, and first mention at $35.35 on Aug 31/01. The company reported better than anticipated results for2Q. Income from operations increased 10.7% to $28.9 million, or 37 cents/sh from last year's $26.1 million, or 30 cents/sh. Management had provided a guideline of 28 cents/sh. Management is now forecasting e.ps. of 45 cents to 50 cents for the third quarter and for the year it has increased guidance to US$1.07 - $1.10, based on a lower tax rate. In the most recent quarter results were enhanced by increased occupancy at the two Bermuda hotels. This also contributed to the lower tax rate of 10%. Hotels in Canada generally did well but, except for Bermuda and Mexico, occupancy rates and rates charged were considerably lower elsewhere. The company announced that it is increasing its ownership in Fairmont Hotels Inc, the company that manages luxury hotels, to 83.5% from 67% by buying out the interest held by Saudi Prince Waleed bin Talal in a share exchange, meaning that Waleed will now own 4% of FHR. Assigning a 25 multiple to earnings of US$1.10, or $1.65 Canadian, produces a possible share price of C$41 over the next 12 months.

D. R. Horton, Inc. (DHI on NYSE), Arlington, TX, tel: (817) 856-8200, Price: July 26/02: $21.08, 52-week range: $29.17-11.67. Last mention of the company in this newsletter was at $22.31 on January 23/02, adjusted for a 3 for 2 split in April. The company continues to pile up growth. Net earnings for 3Q ended June 30 increased 54% to $105.9 million, or 67 cents/sh, from $68.8 million, or 60 cents/sh. This brought nine months earnings to $268 million, or $1.94/sh, an increase of 58% from $170 million, or $1.48/sh. There were 169.0 million shares outstanding on a diluted basis at June 30/02, compared with 115.3 million a year ago, as a result of the Schuler Homes acquisition. The company completed building (closed) 7,877 homes in 3Q, up from last year's 5,467, and during the 9-month period 20,207 homes, compared with last year's 14,087. The company's backlog of homes under contract at June 30 totaled $2.9 billion (13,586 homes), up 30% from $2.3 billion (10,608 homes) on June 30, 2001. Management expects earnings per share for the year ending September 30 to be between $2.77 and $2.82, with a further increase of a minimum 15% for next year. The company has just increased its dividend to 6 cents quarterly from 5 cents. A 12 multiple to this years earnings implies a share price of $34.

La Senza Corporation (LSZ on TSE), Montreal QC, tel: (514) 684-3651, Price: July 26/02: $12.50, 52-week range: $16.26-6.50. Last mention of the company in this newsletter was at $13.00 on April 15/02. The company reported better than normal results for the 1Q of fiscal 2003, period ended May 4, 2002. Sales increased 6.6% to $83.3 million, with same store sales increasing 4.2%. La Senza actually produced a profit of $48,000 during the quarter, a time of the year that historically shows losses. Last years 1Q produced a $265,000 loss that would have been $590,000 if not for a special gain on an investment. Company has a good balance sheet with a net cash-equivalent of $25.9 million ($2/sh), long-term debt of $8.8 million and shareholder's equity of $148.8 million ($11.45/sh). The stock has recently slipped off in price from $16 and may very well provide an investor with a timely entry point.

North American Palladium Ltd. (PDL on TSE, PAL on AMEX), Toronto, ON, tel: (416) 360-7590. Price: July 26/02: $8.00, 52-week range: C$11.90-5.55. Last mention of the company in this newsletter was at C$11.70 on April 3/01. The company has had a tough time over the last 2 years breaking in a new expanded mill. This may now be on the way to fulfillment since management has already supplied some operating results foe 2Q ahead of the full results expected in the 2nd week of August. The mill appears to be have operated at an average rate of 13,900 tonnes/day, which would be 76% of the 15,000 designed rate. From the processing of 1.3 million tones, it has extracted 62.1 thousand ounces of palladium, a 15% increase over that produced in 1Q, 5.2 thousand ounces of platinum, 4,200 ounces of gold, 1.4 million lbs of copper and 0.7 million lbs of nickel. The 2Q report may also mention results from exploration efforts in and around the mine.

Upton Resources Inc. (URC on TSE), Calgary AB, tel: (403) 263-7373, Price: July 26/02: $3.55, 52-week range: $4.25-2.57. Last mention of the company in this newsletter was at $3.85 on May 31/02 and first mention was at $2.85 on Sept 28/01. Upton should be announcing financial results for 2Q ended June 30/02 on August 15. Early indications are that the company is right on target to achieve its production goals of averaging 6,100 boe/d for 2002, with an exit rate of 7,000. In the last few weeks, oil production has been averaging 5,800 bbl/d. Gas production remains bottlenecked at 3Mmcf/d to 4Mmcf/d. The company is participating (21%) in a deep well at Strachan, Alberta that could yield large amounts of recoverable gas. This well should be completed by the end of October. Meanwhile, in northwest Alberta Upton and its partners are finalizing plans to construct facilities and plan for further drilling in the winter in that area where they already have producible gas shut in. Second quarter results could make for interesting reading.

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