20th August 2013
With summer in full swing, fund manager Fidelity Worldwide Investment asked its portfolio managers to highlight some of the key stocks that they think are worth keeping an eye out for. Here is what they had to say:
Whether you choose to drive, fly or even take a boat, your mode of transport could offer some great portfolio ideas. Alex Wright, portfolio manager of Fidelity Special Values, likes the world’s largest cruise ship operator Carnival which has over 50 per cent of the global market and operates 10 different brands including P&O Cruises. Brand loyalty and high shipbuilding costs create a barrier for competitors looking to enter the market. The company is also likely to benefit from its high exposure to the recovering US consumer and increasing exposure to emerging markets.
Europe’s second largest low-cost airline, EasyJet, is also worth a second look, according to James Griffin, portfolio manager of Fidelity MoneyBuilder Growth fund. Operating more than 400 flights daily, the company has no.1 or no.2 positions in more than 20 airports and a sustainable cost advantage over peers – this should help it continue to take share versus peers.
Once at your destination, it is also worth looking at the cars that are popular among local residents. In Brazil and China you may be surprised to see the dominance of European car manufacturer Volkswagen. Sam Morse, portfolio manager of Fidelity European Fund, thinks the company will continue to be a long term winner in a cyclical industry thanks to its scale and market position in those countries. Meanwhile, Amit Lodha, portfolio manager of Fidelity Global Real Assets, likes Nissan Motor, Japan’s second largest automobile manufacturer. The company has an improving product cycle with several new launches in the offing, which should, in turn, support market share gains.
Food and drink
For those looking for a quick and familiar bite to eat to sustain long days of sightseeing, McDonalds can be found in most cities around the world. Dan Roberts, portfolio manager of Fidelity Global Dividend fund, thinks it also makes a sound investment. McDonalds enjoys a dominant global brand, continues to grow market share and boasts a strong balance sheet. He believes that for investors looking for an income, there are good prospects for dividend growth.
For some, beer is also a staple of any good holiday. Angel Ortiz, portfolio manager of Fidelity Latin America fund, highlights Ambev, the fourth largest brewer in the world. The company is benefiting from wage growth in Brazil, along with a dominant market position, which gives it the ability to pass on any costs to consumers.
Many savers will have also heard of Diageo, producer of well-known brands such as Johnnie Walker and Guinness but they may not be aware of some of their lesser known subsidiaries. Nick Price, Portfolio Manager of Fidelity Emerging Europe, Middle East and Africa fund, highlights Kenya-based East African Breweries (EABL), which is majority owned by UK based Diageo and has a significant domestic market share. It has been growing as the company has developed cheaper beverages for the low end segment.
Remaining in Africa, Nick Price, portfolio manager of Fidelity Emerging Europe, Middle East and Africa fund, highlights Shoprite. The South African based supermarket chain is benefiting from the successful expansion of its supermarket brand across 16 African countries, in a continent where people have tended not to buy their food in stores.
Another idea is Brazilian based department store operator Lojas Renner held by Angel Ortiz, co-manager of Fidelity Funds Latin American fund. Benefiting from an increase in consumer spending, Lojas Renner is a best-in-class operator in a fragmented, largely unsophisticated apparel market. In addition to its expansion into new compact and standalone store concepts, the company has an excellent consumer finance business.