Fidelity Low-Priced Stock Fund Q1 2025 Review

2025-05-06 09:03:00 ET

Summary

• For the first quarter, the fund's Retail Class shares returned -1.33%, strongly outpacing the -9.48% result of the benchmark, the Russell 2000® Index.
• The fund's outperformance of the benchmark in Q1 was mainly due to stock selection, especially in information technology, industrials, health care, financials and energy.
• The fund's positioning among sectors remained largely unchanged the past three months, as we made only modest shifts based on where we found the best potential risk-adjusted returns and opportunistic ideas that fit our investment philosophy.

Investment Approach

• Fidelity ^® Low-Priced Stock Fund uses an opportunistic approach in seeking undervalued stocks. It focuses mostly on small- and mid-cap companies, including overseas. Most holdings have share prices below $35 per share or an earnings yield at or above the median for the Russell 2000 ^® Index. (The earnings yield is the inverse of the price-earnings (P/E) ratio; a high earnings yield means a low P/E ratio.)
• Our investment process is based on the belief that many low-priced stocks are mispriced. Mispricings are especially likely to occur in businesses that seem boring and out of favor or which require careful analysis.
• We seek to buy higher-quality companies with stable growth prospects that trade at a discount to our estimate of intrinsic (fair) value.
• Where the gap between price and value is especially compelling, we may invest in firms whose near-term prospects appear challenged. We cast a wide net, and many holdings are outside of the fund's benchmark.
• We invest with a long-term time horizon and global perspective, seeking to deliver attractive risk-adjusted returns. To help manage risk, we look for understandable businesses that are resilient and growing, with honest and capable management, purchased at a modest price.

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