4 favorite Fidelity funds for 2012

By Jack Bowers, Fidelity Monitor

What are the best stock funds to hold in 2012? The following are four choices among Fidelity funds that we think are well-positioned for the upcoming year:

Fidelity Contrafund (FCNTX), Fidelity Low-Priced Stock (FLPSX), Fidelity Blue Chip Growth (FBGRX) and Fidelity Stock Selector Small Cap (FDSCX). They are listed in increasing order of risk.

For a stock-oriented approach that keeps overall risk below S&P 500 levels, Fidelity Contrafund is in a class of its own.

Fund manager Will Danoff looks far into the future to figure out which stocks are in position to be global leaders.

He continues to favor technology but has reduced foreign holdings. The fund’s small positions in cash and gold have also been worked down.

Fidelity Low-Priced Stock faces the prospect that Joel Tillinghast might extend his leave of absence, but the fund’s turnover is so low there will be plenty of time to look at other funds if that becomes a problem.

In the meantime, Low-Priced is still a conservative bet on small caps, which may pay off nicely if the U.S. economy grows faster than the global economy in the coming year.

Fidelity Blue Chip Growth is a diversified bet on large-cap growth. America’s global leaders are gaining market share worldwide, so their future is bright.

The European sovereign debt crisis has made them unusually cheap, but even in a worst-case scenario, they won’t suffer like they did in 2008-09. And they’ve got plenty of cash to scoop up any foreign targets that look attractive.

With dozens of small-cap analysts covering companies that Fidelity’s competitors don’t even track, Fidelity Stock Selector Small Cap is a pure play on Fidelity’s research advantage.

If there’s anywhere that the company's team-management approach should result in superior stock picking over the long run, this would be the place.

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• Fidelity High Income: Unloved, undervalued
• Large-cap growth: Four favorite funds