Cork-based Morrogh Stockbroker is recommending Shell Transport & Trading as a "low-risk buy" for investors. It is maintaining its long-term price target of £6.99 sterling for the share, which is its top pick among the major oil companies.

A combination of cost, portfolio realignment and a strong macro environment continue to drive strong earnings growth. The company announced a 48 per cent rise in full-year profits and a return on average capital way above target at 19.5 per cent, and has announced an aggressive share buy-back programme.

European oil stocks continue to perform well relative to all European markets, on the back of a sustained rally in oil prices driving positive earnings momentum, and a general rotational move to more defensive parts of the market. Morrogh estimates that oil prices will stay high somewhat longer than expected and expects further earnings momentum to be factored into the share price.

Shell lagged its peer group in the mid-1990s, but the combination of cost initiatives and a strong macro environment has enabled it to catch up.