Wednesday share tips: Sports Direct, Ashmore

Share buy-backs may not add value, but they do serve a signalling function, the Financial Times´s Lex column said.

That is especially so in the case of Sports Direct, according to the tipster.

As if the furor around the company´s work practices were not enough, the drop in sterling led to a big jump in its costs, given the fact that it sources roughly half its wares from the States.

The remainder come from Nike, which manufacturers outside the UK.

Yet unless the pound falls much further, a lot of pain is already priced-in, Lex said.

Furthermore, at 12 times´ earnings the company´s shares look cheap on a historical basis.

Most important of all, the current share buyback programme can be doubled in size from its limit of up to 5% without the Board´s approval.

The last time Sports Direct bought back shares, between 2007 and 2009, its majority sharholder, Mike Ashley, increased his stake and later sold.

"Mr Ashley likes a bargain. The share buyback offers one. Get in line," Lex concluded.

UK asset manager Ashmore may be showing signs of recovery, but The Times' Tempus column believes there are plenty of hiccups left that are better avoided for the time being.

Slowing growth in China and America´s monetary policy led to investor fund outflows, something it has appeared to manage well, but still creates various difficulties for its assets.

Marcus LeRoux of Tempus says that "the problem is that it often takes institutional investors some time to react to macro shifts, which could mean there will be a lag between the recovery in emerging markets and a significant change in investment decisions."

LeRoux points out that net flows are still negative, despite markets' expectation for a resurgence in assets. The improved performance of emerging markets points to eventual success but now is not the time.

"There will be some serious hiccups along the way as Ashmore’s core markets recover, which may provide better opportunities to buy."