Any manager can identify a few stocks that look as if they might increase in value over an indefinite period. But how do these stocks actually perform? We asked two of the contributors to last year's Value Investing Guide to evaluate the performance of the stocks they picked a year ago to see if they lived up to expectations.

The good news is that most of them did. The five stocks selected by Kim Shannon, chief investment officer and senior vice-president of Merrill Lynch Investment Managers Canada Inc., for example, have performed at least adequately over the last 12 months. "And all of them are still on my list," she says.

Fletcher Challenge Canada limited, formerly owned by Fletcher Challenge Limited of New Zealand, was purchased by a Norwegian paper company called Norske Skog. Now trading at about $18 a share, up from $17 last year, it has good prospects for further gains and lots of cash, Shannon says. Another of Shannon's picks from last year, Rothmans Inc., was at $18 a share last year and has risen to about $25. "It still shows up well on my model," says Shannon, who expects the stock to rise to $33.50.

Meanwhile, all of the small-cap stocks chosen last year by Bob Tattersall, president of Howson Tattersall Investment Counsel Limited and portfolio manager of the Saxon Small Cap fund, have performed remarkably well. Last year, for example, Tattersall called BAE Systems Canada Inc. "a trigger waiting to be pulled." And it was. A division of Onex Corporation acquired the company (now called CMC Electronics Inc.) for 251/4 cash when the stock was trading at $21.05, a premium of $4.20.

Likewise, Image Processing Systems, Inc. was taken over in a share exchange by Photon Dynamics for the equivalent of $2.58 per share, a premium of $1.77 over the stock's value quoted last year.

Another of Tattersall's picks, Bowridge Resource Group Inc., has gained more than 25 per cent from its low of 65 cents. "Trading at a small premium to book value and about 0.85 times sales, it's still an attractive energy service company either on a stand-alone basis or as a takeover candidate," he says.