Wednesday tips round-up: Sports Direct, Greene King, DS Smith...

The main reasons for the discount on Sports Direct's shares are the two ongoing investigations into the retailer's activities, involving the Serious Fraud Office and Office of Fair Trading.

While the retailer is co-operating fully with the inquiries, there remains the prospect of a surprise, such as a hefty fine or worse, further down the line. They are worth the risk, as Sports Direct is forecast to ramp up its dividend and grow pre-tax profits over the next two years ahead of the London Olympics in 2012. Buy says the Independent.

Goals Soccer is now on a very low valuation after plunging over the last year on concern about debt levels and exposure to the weak consumer economy. The shares are yielding 1.48p% and the price-to-earnings ratio is 9.53 times. Goals has expanded its borrowing facilities to £55m from £47m, meaning it has enough headroom before testing covenants, and says earnings are back on a firmer footing. Buy says the Telegraph.

Under the guidance of Andrew Witty, chief executive, GlaxoSmithKline is emerging from a difficult few years of expiring patents. It is focused on diversifying away from "white pill/Western market" reliance, a sector which now accounts for just a quarter of sales. With the shares trading on 11.8 times 2010 earnings and a 4.7% yield, buy says the Telegraph.

The market sees vet products group Dechra as a safe-as-houses defensive punt, but such has been the antipathy towards the shares that they are now trading on a very undemanding price to earnings level of 12.7 times, while the yield comes in at a reasonable 2.4%. On a valuation basis alone, it is hard to ignore Dechra. A buy, but don't give the group an indefinite period to get the stock going says the Independent.

Pub group and brewer Greene King's outlook is muddy, with the group pointing to "a number of significant headwinds". These include the austerity cuts, benefits reform and the impending rise in VAT, which are expected to force a decline in consumer spending. A hold for now says the Independent.

By any objective measure, we still have too many pubs. Greene King has proved it is up to the challenge of outperforming its peers, investing wisely and securing decent returns. It has a solid balance sheet and the shares are yielding a useful 5.3% on this year's payment. But it is a case of nice management, shame about the sector says the Times.

DS Smith traditionally has been a low-margin, highly cyclical maker of paper and packaging that has relied on a huge dividend yield, approaching 9% at one stage. Chief executive Miles Roberts wants to make the group more focused, with higher margins and reduced cyclicality. The shares are on about nine times' this year's earnings and yield about 3.4%. Hold, pending any further update on strategy says the Times.

Ashtead Group, once an unambitious British plant hire company, is now trying to persuade the market that the decision to spend $1bn beefing up its American business in 2006 was, with hindsight, a wise one. Whatever the long-term prospects, US construction is going to continue to be tough. Ashtead profits should see some bounce in the financial year to end-April 2012 but even on that year's numbers shares are selling on 14 times' profits. No reason to chase says the Times.


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