A Top Stock Picker’s 3 Favorite Plays for 2019

Last year was a rough one for most stock investors. But Kyle Weaver, lead manager of the Fidelity Advisor Growth Opportunities Fund, is not most investors. Under his management, the $5 billion fund saw a return of 12.71% over the past year through January 4, outperforming 99% of its peers as the S&P 500 fell about 7% over the same time period. Weaver, who looks for companies trading at inexpensive valuations and which possess incredible upside over a 5-10 year period, recently shared three of his top picks with Business Insider: Wayfair Inc. (W), The Trade Desk Inc. (TTD), and American Tower Corp. (AMT).

• Fidelity Advisor Growth Opportunities Fund returns 12.71%
• Beats 99% of peers
• Favorite Stocks: Wayfair, The Trade Desk, and American Tower

Wayfair is an e-commerce company that specializes in selling home goods. The reason Weaver likes the e-retailer is that he believes it is “beating Amazon at its own game.” While one thinks of Amazon’s core products as books, CDs, clothing and groceries, Wayfair specializes in dealing with much larger household items like beds, sofas, and billiard tables. Those items are much more difficult to deliver and require a much different distribution network, a niche that Wayfair is currently dominating.

Operating in the massive U.S. and European markets, the home goods e-retailer is customer-focused and still investing for future growth. Wayfair is willing to sacrifice a bit of immediate profitability as it perfects the end-to-end sales and delivery process, which will give the company much longer-term earnings power.

Weaver is also a big fan of American Tower, which owns and operates wireless and broadcast communications infrastructure in several countries. It’s a simple business model: based on 5-10 year contracts that include 2-3% price increases each year, American Tower collects rent from telecom carriers that use the towers in order to transmit signals to their customers. Being the ideal location for carriers to transmit their signals from and given the reluctance of citizens to want new towers built in their area, Weaver says, “Each tower is like its own tiny local monopoly.” Insulation from competitive threats is a big advantage.

While the U.S. market may have more limited growth opportunities, American Tower invests abroad in places like India and Nigeria. While definitely more risky, these areas are poised for long-term growth, making shares of American Tower a long-term investing strategy with potentially massive upside.

Given Weaver’s strong performance over the past year, investors could benefit from taking a closer look at his favorite picks. However, it’s worth noting that data compiled by Bloomberg indicates that just 35% of actively managed large-cap mutual funds outperformed the benchmark S&P 500 over the past year. While the upswing in volatility in the past year provides many opportunities for active stock pickers, the right stocks still have to be picked and the poor record of such active stock picking is leading many investors to opt for passively managed funds instead.