The U.S. stock market’s strong year-to-date gain reflects a favorable economy and solid corporate earnings but also high dispersion and select pockets of strength, says Fidelity Portfolio Manager Steve Wymer, who has found investment opportunities among differentiated, growth-oriented companies.
“Not all industries and companies have benefited equally from the rising tide, as investors have rewarded firms with an advantaged business model but punished those that are not meaningfully differentiated,” according to Wymer, who has helmed Fidelity® Growth Company Fund (FDGRX) since 1997.
In managing the domestic equity strategy, Wymer is anchored by his philosophy that the market often underestimates the duration of a company’s growth, particularly in cases where the resiliency and extensibility of the business model are underappreciated. Thus, he favors firms operating in well-positioned industries and niches that he believes can deliver persistent sales and earnings growth.
Wymer says the fund holding that best exemplifies his investment criteria is Nvidia (NVDA), which dominates the market for advanced graphics chips that are the lifeblood of new generative artificial intelligence systems. Since early 2023, the company has reported financial results far exceeding analysts’ consensus expectation, prompting management to raise its financial forecasts.
Wymer believes Nvidia’s growth wave hasn’t crested, citing the company’s upcoming semiconductor, networking and software products among just some of its key longer-term drivers. Nvidia is by far the fund’s top holding, at 17% of assets, and its biggest overweight versus the benchmark as of October 31.
Elsewhere within the information technology sector, Wymer is similarly optimistic about Pure Storage (PSTG), a maker of all-flash data storage hardware and software products. “This is a niche business that has achieved attractive, secular growth and has a bright outlook,” says Wymer, explaining that its products provide efficiencies in flash operations and environmental heating and power usage, making them optimal for AI.
Looking ahead, Wymer expects that economic growth is likely to be uneven, rewarding, and challenging industries and companies in varying ways.
“I believe firms with an advantaged business model and other differentiators, like Nvidia and Pure Storage, have the potential to prosper, even in an uncertain macro environment,” he concludes.
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Steve Wymer is a portfolio manager in the Equity division at Fidelity Investments.
In this role, he manages Fidelity Growth Company Fund (since 1997), Fidelity Series Growth Company Fund (since 2013), Growth Company Pool (since 2013), and Growth Company K6 Fund (since 2019).
Prior to assuming his current responsibilities in 1997, Mr. Wymer held various other roles at Fidelity, including that of portfolio manager of Fidelity Dividend Growth Fund from 1995 to 1997, portfolio assistant on Fidelity OTC Portfolio from 1994 to 1995, portfolio manager of Select Chemicals Portfolio from 1993 to 1995, portfolio assistant on Fidelity Magellan Fund from 1992 to 1994, portfolio manager/portfolio assistant on Select Automotive Portfolio and Fidelity Growth and Income Fund from 1990 to 1992, and equity research analyst from 1989 to 1990.
Before joining Fidelity in 1989, Mr. Wymer worked as a small business consultant at Deloitte Haskins & Sells from 1985 to 1987. He has been in the financial services industry since 1989.
Mr. Wymer earned his bachelor of science degree in accounting from the University of Illinois and his master of business administration degree from the University of Chicago.