Heritage Fund Predicts Surge in Wanderlust

KANSAS CITY, Mo. (TheStreet) -- David Hollond, manager of the American Century Heritage Fund(ATHAX), expects renewed consumer spending to boost shares of travel companies, such as Priceline.com(PCLN), Royal Caribbean Cruises(RCL) and Starwood Hotels & Resorts Worldwide(HOT).

The $2.3 billion fund, which has earned four stars from Morningstar(MORN), has gained 38% this year, beating the 28% advance of the S&P 500 Index. The Heritage fund has returned 9% annually, on average, during the past five years, beating 99% of competing funds.

Welcome to TheStreet's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five fast and furious questions.

What are you noticing in the market?

Hollond: Our investment process focuses on identifying companies with accelerating revenue and earnings growth rates that we believe are sustainable. We also look for stocks with the strongest relative price strength or price momentum. Our process is leading us toward companies that benefit from economic recovery.

We are starting to see early signs of business picking up for the first time in several quarters. Our team of analysts and portfolio managers recently met with a large number of company CEOs and CFOs, and most of them are more positive about their companies' near-term outlooks than they were in the first three quarters.

What is your top stock pick?

Hollond: Priceline.com is one of our top stock picks. Priceline.com is an online travel booking company through which people make hotel and airline reservations, often at steep discounts.

In 2009, the secular shift toward consumers booking vacation travel online (rather than directly or via travel agents) continued. Not only does Priceline.com benefit as online travel booking becoming a greater percentage of total travel booking, but it is also gaining market share in the online travel booking category. In the most recent quarter, Priceline.com's share of the total market rose 4 percentage points, year-over-year, vs. its publicly traded peers. Priceline.com has also shown accelerating travel bookings since the second quarter.