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With Canadian stocks, the only thing scarcer than U.S. press coverage is good research. Which isn't to say that no research is being done. It's just that most of it is done by Canadian brokerage houses, which, like their U.S. counterparts, save the best stuff for clients.

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There's one exception, though:

Groome Capital

, a Montreal investment bank that posts its research online at The idea, according to founder Richard Groome, is to emulate

Wit Capital


DLJ Direct

by underwriting IPOs and marketing shares to clients via the Web. "We intend to become


portal for emerging Canadian companies," he says.

Groome also records and archives the road-show presentations of its clients and interviews with their CEOs. For legal reasons, which I don't fully understand, the road-show videos are off-limits to U.S. visitors. But anyone with Microsoft Media software can access the CEO interviews, most of which are worth a listen.

In a July 6 interview, for instance, cyber-security firm

Jaws Technology


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CEO Robert Kubbernus calls his company "one of the only true end-to-end IT security firms out there today," and notes that with the movement of business online, companies are increasingly vulnerable to invasion.

"The problem is getting bigger and younger," he says, as teen-agers learn to hack corporate nets. And because a company's brand name is tarnished when its security is breached, he says, "Most of our engagements are with companies that don't want the world to know they were attacked."

Jaws is still tiny, with March quarter sales of only C$650,000. And in the past couple of years its stock has done the typical Canadian micro-cap mambo, shooting from 1 to 15, then back down to 3. But according to Groome's June 21 analysis (accessible by clicking on "Research" and then choosing "J" from an alphabetical list), a recent partnership with a California e-commerce software company should allow Jaws to generate revenues of C$12 million this year and C$22 million in 2001.

Another source of ideas is Groome's top-10 list of current analyst favorites, where

AEterna Laboratories


currently occupies the top spot. An early leader in the field of angiogenic inhibitors, -- drugs that stop the formation of blood vessels, possibly starving tumors -- AEterna has one drug in Phase III clinical trials and several more in the pipeline.

In a January report, a Groome analyst notes that AEterna has formed a separate company to run its cosmetics and nutritional divisions, "which will allow the core biopharmaceutical operation to be recognized as a pure biotech company." He projects 2000 revenue to more than double to C$15 million, with the break-even point to come in 2001. With C$60 million of cash on hand, he says, it should have no trouble holding on till then.

Next on the list is


(HML:Toronto), where the attraction is hemoglobin replacement, i.e. the development of compounds that replace whole blood in transfusions, thus limiting the risk of transmitting diseases like AIDS through tainted blood. Its first compound just passed Phase III trials with what the company calls flying colors, and should be on the Canadian market within a year. Hemosol's cash reserves exceed C$40 million, so here again, new financing won't be necessary in the short term.

A hardware stock with a good story is



, a chip maker and systems integrator. Its lame 6% sales growth in the June quarter masked the fact that semiconductor sales were up 47%. Cash flow, meanwhile was up 40% and the backlog rose from C$43 million to C$323 million. For all you optical networking junkies out there, Groome notes that another reason for optimism is Mitel's new line of opto-electronic devices.

One caveat: As an investment bank, Groome's analysts cover mostly current and prospective clients, so their opinions are no more objective than those of analysts at, say,

Merrill Lynch


So treat this research a good source of background information, collected by smart people who are close to the situation. Then verify it yourself, as best you can, with calls to the company or other sources.

And go through the archived reports to see how well the original predictions are holding up. Groome has covered Hemosol, for instance, for two years, and comparing that first report with the company's subsequent results yields a pretty good fit.

The prediction that Jaws' revenues (only C$650,000 in the first quarter, remember) will hit C$12 million for the full year bears watching, too. If this starts to pan out, you've got a momentum play. If not, the analyst has lost credibility for the next big call.

John Rubino, a former equity and bond analyst, is a frequent contributor to Individual Investor, Your Money and Consumers Digest. His first book, Main Street, Not Wall Street, was published by William Morrow in 1998. At time of publication, he had no position in any stocks mentioned. While Rubino cannot provide investment advice or recommendations, he invites your feedback at