Jennifer Dowty writes a column for Investor's Digest of Canada highlighting stocks that offer value and profitability and the following two companies appear to represent potential shareholder value.
       "In the energy sector, Duvernay Oil Corp. (TSX DDV, $30, 403-571-3600, www.duvernayoil.com) is one of my top recommendations.
        The company was founded in June 2001. It is a junior oil and gas play involved in the exploration, development and production of natural gas and crude oil. Production is weighted 85 per cent towards natural gas. Operations are located in northwest Alberta and northeast British Columbia.
        Management and directors have significant ownership positions, so their interests are aligned with shareholders' interests, which is always a good sign.
        Duvernay's production is growing at a stellar rate. In 2003, production was just over 3,000 barrels of oil equivalent per day (BOE/d). This climbed to over 6,000 BOE/d in 2004, and this year the company expects to average 11,000 BOE/d, with a targeted exit rate of around 15,500 BOE/d.
        Meanwhile, cash costs are declining, and the result is escalating cash flows. The consensus estimate for cash flow is $2.65 for 2005, and leaps to $4.10 for 2006.
The company has also been delivering strong operational results that exceed analysts' expectations, and I believe this trend will continue. Duvernay has a large undeveloped land base, and has had a high drilling success rate.
        It also recently increased its capital program. On June 7, management announced a $50 million bought-deal financing. Funds were raised to expand the company's spending from $180 million to $230 million.
        This issue was received extremely well, with strong institutional interest and, as a result, was several times over-subscribed. I wouldn't be surprised to see Duvernay eventually reorganize into an income trust structure.

Good as Gold

        Gold is another commodity whose price may gain momentum. Recently, gold prices have been on an uptrend, rising to a five-week high as investors abandon both the euro and the U.S. dollar and seek the safety of gold. Gold futures are now trading above $430.
        Some investors began to sell euros and buy gold after voters in France and the Netherlands rejected the European Union constitution. Other investors are selling U.S. dollars and purchasing gold in the belief that U.S. economic conditions are eroding. The beneficiary from skepticism and uncertainty with the U.S. and European economies has been gold.
        Crystallex International Corp. (TSX KRY $4.51, 416-203-2448, www.crystallex.com) stands to benefit from the rising bullion price, as well as from anticipated near-term news.
        Crystallex is a Canadian-based gold producer with operations and exploration properties in Venezuela. Its principal asset is the Las Cristinas property.
        I expect the price will go higher principally for one reason: Crystallex will receive the final Permit to Impact Natural Resources. This is the catalyst to watch for. The company may receive shortly, and once it does, construction can begin immediately in order to get commercial production underway by the target date of late 2006.
        Las Cristinas is Crystallex's principal asset, and management is intently focused on bringing this site into production.
        Rumor has it that once the final permit is received, Crystallex will be an attractive takeover candidate.
        Technically, the stock has been drifting in the $4 to $5 range since October 2004. There is technical resistance at the $5 level and then at the $5.50 level. However, once the company receives its final permit, the stock could break through these key resistance levels and set a new 52-week high."
        Editor's Note: Jennifer Dowty, CFA, is an associate portfolio manager at MFC Global Investment Management. Ms. Dowty writes a regular column in the Investor's Digest of Canada, 133 Richmond St. W., Toronto, ON M5H 3M8, 1 year, 24 issues, $137.