With COVID vaccinations rising and restrictions on gathering diminishing, customers are dining, drinking, and traveling more after staying home for much of the past year. Sam Chamovitz, manager of Fidelity® International Small Cap Fund (FISMX) thinks that trend could continue thanks to pent-up demand from previously pent-up customers.
“No one can be sure about the timing, but I do feel optimistic about the economy and I think some of the well-run companies in the leisure industry have the potential to snap back quickly in a recovery,” he says.
Chamovitz notes the COVID-19 pandemic has pushed valuations for many small cap stocks with earnings visibility significantly higher, while leisure stocks, where near-term earnings remain uncertain, have yet to fully recover.
Additionally, he believes that once developed economies fully reopen, it should unleash strong demand for leisure activities.
For this reason, Chamovitz says he’s increased the fund’s modest stake in the segment, which includes restaurants, food distribution companies, and hotels.
These include Wetherspoon (JDWPF), a UK-based pub and restaurant chain that owns the majority of its real estate, and Marr, a leading food distribution company in Italy with large exposure to the travel industry.
“I’ve invested in these companies because, at some point, these businesses could see improved earnings and possible market share opportunities against weaker competitors that have been forced to exit the market,” he says.
Fidelity® International Small Cap Fund held securities mentioned in this article as of its most recent holdings disclosure. For specific fund information, including holdings, please click on the fund trading symbol above.
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