Three stocks that should put in a strong performance

Each week, a professional investor tells us where he'd put his money. This week: Paul Stappard of SGPB Hambros.

There's been an awful lot of speculation as to what the aftermath of Brexit will be. Rather than add any further conjecture on this, I'd like to outline the investment cases for three companies that have strong management teams in place and are structurally positioned to thrive in any environment, and, more importantly, make profitable investments.

The first is De La Rue (LSE: DLAR). Its principal business activity is the production of banknotes, where it is the global number-one operator, supplying some 140 countries with their currency needs. We believe De La Rue is well placed to benefit from structural growth in demand for banknotes (the repercussions of negative interest rates and general economic uncertainty should boost demand for physical cash).

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The current management team, appointed in 2014, has turned the business round, exiting loss-making non-core businesses and pushing new product development. Recent results highlighted this progress and analysts upgraded their forecasts accordingly. With more than 70% of business coming from overseas, the recent falls in sterling are a welcome boost for profits and competitiveness. The stock trades on 14 times forward earnings and has an attractive 4% dividend yield, which is well covered from cash flow.

Shire (LSE: SHP) is one of the cheapest global pharmaceutical companies and is positioned at far too large a discount to its peers in the sector, on 12 and 11.5 times 2017 forecast earnings and cash flow respectively. Not only is the stock cheap, but following its recent $32bn merger with Baxalta, it has one of the best growth profiles too.

Shire's management has a strong track record of excellent cost controls, which could easily see the initial potential synergies from the Baxalta integration being materially underestimated. In any case, it is already a well-run company with several multi-billion dollar franchises, providing both product and geographical diversity, and a strong pipeline with numerous products with long exclusivity periods under development.

Food producer Tate & Lyle (LSE: TATE) is transforming from being a highly cyclical, rather unpredictable business to becoming a reassuringly predictable and profitable one. Both the level and quality of earnings are improving, as the last results showed. Management also issued a very confident trading outlook for the rest of the year and on the firm's progress towards longer-term strategic goals.

Historically, Tate has not been very well-liked by the investment community, but this is starting to change and forecasts are being upgraded. However, there is room for sentiment to improve further, and the valuation case is compelling as well. The stock trades at a discount to other food producers, on 17 times forecast earnings and a good dividend yield of 4%.