One to watch: Soco International

SOCO'S business is set to be transformed early next month by the development of its TGT oilfield, offshore Vietnam; yet the stock continues to trade at a substantial discount to our estimated 597p-a-share net asset value.

We think this FTSE 250 constituent is one of the least expensive stocks in our international universe.

We expect the delivery of TGT, which has continued without fanfare, to get top billing in Soco's 24 August results presentation. TGT phase one is scheduled to come onstream at the start of September and production should hit 55,000 barrels-per-day (b/d) by year-end; a second phase of development activity could increase output to an estimated 90,000b/d in late 2012.

We forecast the TGT development will help lift Soco's production from 2,500b/d in early 2011 to 19,000b/d by year-end. The firm could be allocated 45 per cent of the field's revenue.

We think the stock looks undervalued on a cash flow metric, too.

Soco International

286.5p -16.8p

Scotsman says BUY

• Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a guide to the future. RBC Europe makes a market in the securities of Soco and may act as principal with regard to sales or purchases of this security.

BROKER SNAPS

Home Retail Group

124.7p -8.5p

Broker says SELL

SEYMOUR Pierce has cut its rating on Home Retail Group – which owns Argos and Homebase – from "hold" to "sell". Analyst Freddie George said: "It is hard to see a reversal of fortunes for the group over the medium term unless there is a restructuring of the Argos portfolio combined with a re-think on strategy."

Melrose Resources

167.5p -6.5p

Broker says SECTOR PERFORM

FOLLOWING interim results from Edinburgh-based oil and gas explorer Melrose Resources, RBC Capital Market said: "The high-profile SW-Kanun-1 well in Turkey encountered no oil; we expect this bad news to hurt sentiment. The company will decide whether to continue with operations in Turkey."