Statoil ASA (STO)

[Timothy Smith]

The stock is not expensive at around 9x this year's expected earnings and just 21% above stated book value. The shares also yield ~5%.

The company is picking up some positive catalysts recently. Statoil reported it struck oil offshore of NewFoundland the other day in a field that is believed to contain 100mm to 200mm barrels of recoverable oil.

In addition, BofA/Merrill Lynch upgraded the shares to "Buy" from "Neutral" today and raised its price target to $25 a share from $23. The upgrade noted the shares carried "relatively low execution and political risk."

The company has raised earnings at just over an 8% CAGR over the past five years. In addition, the shares sell near the bottom of its five-year valuation range based on P/E, P/S, P/CF and P/B.