People in the U.S. are on the move again, says Fidelity’s Matt Drukker, and even as threats posed by the delta variant of the coronavirus remain, he notes road traffic has increased, diners have returned to restaurants, and some employees are back to work at their offices.
“This has created continued opportunities for digital advertising and media companies, as well as certain traditional media firms that I believe many investors have overlooked,” says Drukker, portfolio manager of Fidelity® Select Communication Services Portfolio (FBMPX).
In recent months, Drukker took advantage of low valuations to add shares of movie theater chain Cinemark Holdings (CNK) to the fund. He also retained an outsized position in outdoor media company Lamar Advertising (LAMR).
“I believe each could benefit from consumers eventually returning to once-normal habits, such as going to the movies and driving to work,” Drukker points out, noting that these positions complement his fund holdings among digital advertisers.
He considers Cinemark a potential recovery story in the making, citing pent-up demand for long-delayed new movie releases that are slated to arrive in theaters in greater numbers in 2022. As the company waits for more moviegoers to return to theaters, Drukker notes that Cinemark has benefited from higher ticket prices and concessions revenue.
Meanwhile, Lamar, the largest outdoor advertising company in the U.S. with 20% market share, is exposed to people in the suburbs and smaller markets that have returned to the roads in greater numbers, Drukker says.
“With advertisers hungry to attract more customers, I think companies such as Lamar are selling lots of ads, commanding solid pricing, and could see attractive fundamentals heading into 2022,” Drukker says.
Securities mentioned were fund holdings as of September 30. For specific fund information, including full holdings, please click on the fund trading symbol above.
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