Insights from Fidelity's portfolio managers
Portfolio managers offer investing insights for the months and years ahead.
How to find companies building for the future
John Roth – January 29, 2020
"The pace of technological innovation has remained incredibly strong over the past decade and companies that are committed to investing in innovation in 2020 and beyond have a longer-term edge," says John Roth, lead portfolio manager of Fidelity® Mid-Cap Stock Fund (FMCSX).
For example, Roth thinks retailers spending the time and money to facilitate online delivery, in-store pickup, and personalized shopping experiences are more likely to thrive longer term. Kroger (KR) is an example of a retailer that has evolved its business model to offer door-to-door delivery service, as well as same-day online grocery pickup.
Turning to health care, he's been bullish on companies that are providing solutions that lower the cost of health care for payers. Here, he has preferred managed-care organizations Molina Healthcare (MOH) and Centene (CNC), which have been aggressively investing in technology to offer the most efficient options to manage health care costs for businesses, the government, and individuals.
Among industrial firms, defense and aerospace stand out, largely because our military infrastructure is benefiting from technological advancement as well, he says. Roth specifically cites Huntington (HBAN), which holds the sole contract for building the new Ford class of aircraft carriers, the most advanced carrier ever constructed, as well as other naval-surface vessels and nuclear submarines.
Lastly, in energy, liquefied natural gas (LNG) appears to be an area of secular growth, driven by its position as a clean-burning fossil fuel and improved liquefaction technology, allowing it to be more easily transported and traded globally. For this reason, the fund owned stakes in several energy companies that specialize in the conversion of natural gas to LNG as well as the transportation of LNG.
Learn more about this manager and his fund
John Roth is lead portfolio manager of Fidelity® Mid-Cap Stock Fund, which held securities mentioned in this article on December 31, 2019. As of this date, Kroger composed 0.47% of fund assets; Molina Healthcare composed 1.08% of fund assets; Centene composed 0.52% of fund assets; and Huntington composed 1.23% of fund assets.
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Investments in mid-sized companies may involve greater risks than those in larger, more well known companies, but may be less volatile than investments in smaller companies.
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Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.
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