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If you’re tired of hearing about the recession, fight it!

One expert analyst has a selection of stocks that should stand up to a recession, and a group of top analysts offer their favourite stock picks.

“By now, you are likely getting bored with all the chatter about the upcoming U.S. recession, the subprime meltdown and the credit crisis sweeping the world. Every day, it seems, it’s all that the market thinks about and, once again, equity markets are scared.”

Those are the words of Mr. Peter Hodson. As a senior portfolio manager of the Sprott Growth Fund, he has to deal with this chatter on a daily basis. Mr. Hodson is also a regular contributer to Investor’s Digest of Canada, so he has a public forum for his concerns.

Basically, he reckons it’s time to fight back.

“So, since I can’t stop hearing about it, I thought I might try to fight it.”

We’ll find out exactly how Mr. Hodson plans to carry on the fight shortly.

This Canadian advisory has also asked a group of elite analysts to submit their top stock picks and we’ll pass those on to you in a bit.

No connection with homebuilding

To combat the ongoing babble of recession rhetoric, Mr. Hodson has “compiled a list of companies that, in my view, have no connection to a U.S. housing-market crash, other than through sentiment.

“In other words, while these stocks are not immune to decline by any stretch, I am having trouble figuring out exactly how they would be impacted by a U.S. housing crunch.”

In short, these stocks will rise or fall on their own virtues, not because there’s a housing slump, a credit crunch, or even an unravelling of consumer confidence. If you are worrying about a stock in your portfolio, look carefully at the stock’s own prospects. Don’t get hung up on general trends that have no palpable connection to the firm you’ve invested in.

Mr. Hodson’s first example is a stock that has declined despite excellent results. Ceradyne Inc. (NASDQ-CRDN) makes body armour for soldiers. With a market cap of $1.2 billion, the stock has slipped in spite of rapidly rising earnings and a strong balance sheet. “It business has, unfortunately, boomed over the last five years because of the wars in Iraq and Afghanistan,” adds Mr. Hodson.

The company is facing a grey area, due to uncertainty over political spending, projected troop withdrawls, a pending change in government, manufacturing issues and other factors.

“I fail, however, to see any direct or indirect connection between the U.S. housing market and the company,” adds the analyst. “Still, the way the stock has reacted recently you would think it was a homebuilding company.”

Where would you advertise?

How about a Chinese advertising firm? Is that going to lose ground during a U.S. recession? Focus Media Holding Ltd. (NASDQ-FMCN) had a good year, as its shares rose over 60 per cent. But they, too, have gone down recently.

The business has increased as advertisers rush into the growing middle-class market in China. So what’s up?

“Is it connected to a U.S. housing slowdown?” asks Mr. Hodson. “Well, maybe, if U.S. corporations have less money to advertise. On the other hand, if you were to spend advertising dollars, where would you rather go? To a slow U.S. economy, or a rapidly growing Chinese economy? In fact, you could potentially argue that a U.S. slowdown would be good for Focus Media, as more advertising dollars shift away from the U.S.”

The trials of a drug company

A Canadian drug development company would seem to have even less reason to react to a U.S. housing slump than a Chinese ad agency.

Theratechnolgoies Inc. (TSX-TH) has a promising Phase 3 product known as tesamorelin, which has been shown to reduce fat accumulation in HIV patients.

Despite the encouraging results in this crucial phase of testing, the stock has declined about 10 per cent in the past month.

“Now, a drug company’s fortunes rise and fall with clinical trials, reimbursement rates, patents, competition and incident rates,” writes a clearly exasperated Mr. Hodson. “If anyone can tell me how a drug company in Phase 3 trials should be impacted by a U.S. housing market crunch, please do so.”

Any gold stock in a recession

Mr. Hodson has one more call to make, and it’s a collective one. Pick any gold stock, he says.

“If the U.S. goes into recession,” he explains, “it’s likely U.S. interest rates will head lower. This will hurt the U.S. dollar. If this happens, it is likely that gold will continue its recent price rise, being as it is priced in cheap U.S. dollars (it becomes cheaper to buy for international investors).”

That said, the analyst finds it difficult to make a connection between a U.S. housing problem and gold stocks. “In fact, as noted above, a U.S. recession should actually be good for gold stocks.”

Well, yesterday’s action on the markets would seem to bear out Mr. Hodson’s analysis, as bullion has soared. In the meantime, some leading gold stocks have some sharp spikes of late. Nonetheless, the pattern over the past few months has been one of gold stocks failing to keep up with the rising price of gold.

Had he but space enough and time, Mr. Hodson concludes, he could cite many more examples of stocks that should not be tarred with the housing brush, but appear to be getting smeared anyway.

“Still, the point has been made: if you are worried about a U.S. slowdown, fine. But there is always the chance your investments won’t be impacted by a U.S. slowdown at all, so just make sure you are selling for the right reasons.”

Buying for the right reasons is no less important, of course, and one group of experts believes you have the best possible reasons for buying the stocks they name.

All-stars with good reviews

The NHL All-Star game was recently played to underwhelming reviews. Investor’s Digest of Canada has assembled another group of all-stars who received much better reviews.

Investment consulting firm Brendan Wood International recently released its annual list of all-star Canadian analysts. This advisory asked each member of this elite group to pick one stock they liked for the year ahead. What emerged was a very interesting cross-section of equities.

Mr. Ben Cherniavsky of Raymond James likes CAE Inc. (TSX-CAE). This once-golden flight simulator manufacturer has flown through some tough times in the aviation industry and appears to be back up to speed. “The order book is expected to fatten as the U.S. airline industry replaces its aging fleet with new aircraft platforms, and developing countries address pilot shortages (China will need to expand its 2,000 pilots in the cockpit by 2010).”

Two all-stars have come up with the same stock. Mr. Peter Sklar of BMO Capital markets and Mr. Fadi Chamoun both like Magna International (TSX-MG.A). “Mr. Sklar notes that the stock is idling at the bottom of the historical range for its price-to-book (1.0) and EBITDA multiples (3.5),” notes the advisory. Mr. Chamoun likes the staying power of the company’s rich cash balances, which should reach US$3 billion by the end of 2008.

Blackberry in Motion

No big Canadian stock makes more abrupt moves than Blackberry inventor Research in Motion (TSX-RIM). But it can move even further, says Mr. Deepak Chopra of National Bank Financial. “My view is that RIM can still grow phenomenally for years to come,” he says.

The company still has only two per cent of the global handset market and “the market share gains can double or triple it over the next couple of years,” adds the analyst. China and Russia await the Blackberry invasion.

Mr. Ian de Verteuil of BMO Nesbitt Burns has a good word for Toronto-Dominion Bank (TSX-TD). The bank has been getting high marks from many observers for staying out of the subprime mortgage and asset-backed paper mess. Among other advantages, this will allow TD’s Ameritrade Holding Corp. to acquire higher trading volumes as rival E*Trade Financial slumps under the weight of subprime troubles.

Then there are three picks that aren’t as well known as those above.

A new director and a traffic cop

Mr. Claude Lamoureux, outgoing president of the Ontario Teachers’ Pension Plan, recently joined the board of directors of nutritional products maker Atrium Innovations Inc. (TSX-ATB). This is one of two notable developments at the company. In addition, says Mr. Jesse Hayem of Desjardins Securities, “the plan to sell a non-core division and consolidate the fragementary nuturition-products sector should be a tonic for share prices.”

Think of Sandvine Corp. (TSX-SVC) as “a traffic op for the Internet,” says Mr. Peter Misek of Canaccord Adams. Some big Internet providers have submitted orders for Sandvine’s equipment, which routes files on the web for speedier service. The venture capital firm of tech magnate Terry Mathews is one of the backers.

Mr. Andrew Boland of Peters & Co. has a far away pick. Arawak Energy Corp. (TSX-ABG) is a junior oil company that does its drilling in Kazakshtan. It produced an average of 11,125 barrels of oil per day in its latest quarter, a 27 increase from the previous quarter. And “plenty of upside is associated with future explorations programs” in contract areas in Kazakhstan, adds the analyst.

Finally, we come to two big names that could soon be going under different names.

Mining takeovers not over

Mr. John Redstone of Desjardins Securities believes that the streak of mining takeovers is not quite tapped out yet. His candidates are two of the biggest names left: Alcoa Inc. (NYSE-AA) and Canada’s biggest remaining mining company, Teck Cominco Ltd. (TSX-TCK.B). Both are tempting, he says, because of the recent declines in aluminum and zinc prices.

“Teck Cominco also has low-cost zinc mines with over 20 years of reserves, while Alcoa has secured its power needs through long-term contracts.”

So speak the all-stars in Investor’s Digest of Canada. They remind us that even if there is a you-know-what in the U.S. (we’re tired of hearing the word, too), there will always be stocks to pick. And — dare we say it — some of them will probably go up.