The current political climate affecting Russia has hurt the price of this week’s Stock of the Week, which creates an opportunity for investors.

Russian Oil

Lukoil PJSC (LUKOY) is the second-largest oil company in Russia, with huge resources and a major international presence in Europe, Asia and Central and North America. In addition to exploration and refining, it operates more than 5,500 filling stations in 35 countries.

Because of Lukoil’s base in Russia, the cost of its reserves is far lower than the reserve cost of major multinationals such as Exxon and Chevron and is among the cheapest in the world on a per-barrel basis. The Russian government considers the reserves a state asset and makes sure Lukoil gets easy access to them. And the company likely will benefit from Russian president Vladimir Putin’s drive to repatriate capital to reduce exposure to sanctions while shoring up Russia’s domestic economy.

Investor concern about the Russian government has pushed the price of Lukoil’s American Depositary Receipts (ADRs) down to an extreme degree. Shares trade for seven times likely 2018 earnings at a company whose dividend of $3.50/ADR/yr. recently yielded 5.5%. And Lukoil often declares special dividends as well. Revenue was $101 billion last year and likely will be $110 billion this year and $112 billion in 2019.

Fiscal year: December. Earnings per ADR: 2019 est./$10.50…2018 est./$10.15…2017/$9.85.

Robert T. Lutts is president of Cabot Wealth Management, Salem, Massachusetts, which manages $650 million, and author of The Great Game of Business: Investing to Win. ECabot.com