One to watch: Soco International

SOCO International's business is set to be transformed in the third quarter by the development of its TGT oilfield, offshore Vietnam; yet the stock continues to trade at a 40 per cent discount to our 595p-a-share net asset value, which makes it one of the least expensive stocks in our international universe.

Phase one of TGT is scheduled to come onstream in August and build quickly to an initial plateau of 55,000b/d (gross). Soco recently received government approval to push ahead with phase two, which could increase full field production to abou 90,000b/d (gross) from summer 2012.

We forecast that the TGT development will help lift Soco's production, from 2,500b/d in early 2011, to more than 20,000b/d in 2012. And, under the terms of its production sharing contract (PSC), the company could be allocated 45 per cent of the field's revenue. As a result we calculate Soco's post-tax cash flow should leap 20-fold.

Soco International

354.3p -10.7p

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

Aviva

425.8p -3.4p

Broker says BUY

Killik & Co reiterated its "buy" rating on insurance giant Aviva following the sale of its RAC car breakdown business for 1 billion. Head of equities Jonathan Jackson said: "While Aviva is not going to be high growth in the short term, it is cheap, offers strong balance sheet valuation support and has a high dividend yield."

Tesco

395.2p -3.6p

Broker says BUY

Following a site visit to several Tesco supermarkets and its competitors' stores in central Europe, Shore Capital has maintained its "buy" rating on the UK's biggest grocery chain. Shore said: "What these store visits reveal to us is that Tesco is in a solid position in Poland. Market share should continue to be gained."